INVISTA Just Bought 5 Artificial Intelligence (AI) Stocks, 1 of Which Is Up 142 Percent

Early 2023.INVISTA (NASDAQ: NVDA)It is still a company with a market capitalization of $360 billion. Since then, its value has increased by $1.8 trillion, and it is now second only toApple respond in singingMicrosoftThe third largest company in the world.

The strong interest in artificial intelligence (AI) is a key microdrive for value creation, and Nvidia makes the industry's most powerful graphics processing units (GPUs) for data centers, which developers use to build, train, and deploy AI models. These chips drove Nvidia's data center revenues to more than triple in fiscal year 2024 (ended January 28), and this momentum looks set to continue in fiscal year 2025.

Nvidia is now using some of its newly acquired wealth to invest in other AI companies, which could hint at where the next wave of AI value will be created.

Nvidia buys five AI stocks by the end of 2023.

Nvidia filed a 13-F document with the U.S. Securities and Exchange Commission on Feb. 14, in which it publicly disclosed five new holdings:

1. SoundHound AI (NASDAQ resonance code: SOUN)In addition, the company develops speech recognition and conversational artificial intelligence technologies.

2. Designed processors for the world's largest chip company.Arm HoldingsThis is Nvidia's largest investment, worth $147 million by the end of 2023. This is Nvidia's largest investment, valued at $147 million by the end of 2023.

3. Nano-X ImagingThe company uses artificial intelligence to enhance medical imaging to improve patient outcomes. The stock is Nvidia's smallest investment, worth less than $400,000 by the end of 2023.

4. Recursion PharmaceuticalsThe company is utilizing artificial intelligence to help with drug development.

5. TuSimple HoldingsThe company has developed an automated driving platform for the trucking industry.

SoundHound AI stock has been the best performing stock to date, with a 2024 gain of 1,42%. It values Nvidia's stake at about $8.7 million, which doesn't sound like much, but SoundHound is only a $1.5 billion company.

So should investors follow Nvidia's lead and join the ranks of conversational AI experts?

SoundHound's Artificial Intelligence Product Group Goes from Strength to Strength

Most of us are familiar with AI chatbots such as ChatGPT, Gemini, and Claude. Originally designed to receive text-based prompts, they are capable of generating textual content, images, tweets, and computer code based on commands.SoundHound specializes in conversational AI, which is designed to recognize voice-based prompts and respond accordingly.

This opens up a range of possibilities, especially in use cases where hands-free functionality is required. For example, a restaurant chain is using SoundHound's "Employee Assist" technology to help employees quickly respond to questions in high-pressure environments, such as when serving customers or completing operational tasks.

Similarly, SoundHound's technology has also been recognized by theMercedes-Benz(math.) andStellantis Car makers such as the U.S. Department of Motor Vehicles have favored SoundHound technology to power their in-vehicle virtual assistants. This means that in addition to weather forecasts, sports results, and information about restaurants where they are located (to name a few), drivers can also instantly retrieve information about the vehicle's features.

SoundHound recently announced a new郃 partnership with Nvidia's Drive platform, which will enable automakers to deliver artificial intelligence at the edge. This means drivers will not need an internet connection to use the voice assistant, which allows it to be used in more places and improves data privacy.

The Drive platform is Nvidia's B耑 to B耑 solution for automakers looking to install autonomous driving features in new vehicles. Over the long term, Drive could become an important distribution channel for SoundHound technology, as it already serves many of the world's leading automotive brands.

SoundHound's revenues are meager and its losses are severe.

SoundHound's 2023 revenues of $45.8 million represent a 47% increase from 2022, and the company is still in the midst of an expansion phase, but did end last year with a $661 million order backlog - a figure that is double that of the end of 2022.

Koon forecasts revenues to reach approximately $70 million in 2024, with growth accelerating by 54%.

That's good news, but SoundHound's bottom line is a concern in the near term, as the company lost $91.7 million last year. While it's normal for small, growing tech companies to lose money, SoundHound can't afford to do so in 2024 with only $95.2 million in cash and equivalents on its balance sheet.

Risk-averse investors should not follow Nvidia's purchase of SoundHound stock.

These financials make SoundHound stock a risky investment compared to other AI stocks like Nvidia or Microsoft. It is highly likely that the company will need a cash infusion in the next year or two to continue operations, which creates uncertainty.

That said, Nvidia's investment in SoundHound stock is a vote of confidence that could spawn more unique deals like the Drive platform. In addition, SoundHound's order backlog could accelerate revenue growth in the coming years.

But remember this: Nvidia's stake in SoundHound is only worth $8.7 million. If it were to go to zero, it would have virtually no effect on the $2.2 trillion chip giant. That's a loss of $0.39-yes, 39 cents-for someone with $100,000 in net assets.

Not only does the average investor have fewer resources than Nvidia, but their risk appetite may be very different. Therefore, investors purchasing SoundHound stock should be able to withstand volatility and the potential for loss.

Should you invest $1,000 in SoundHound AI right now?

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Anthony Di Pizio does not own any of the stocks mentioned above. the Motley Fool owns and recommends Apple, Microsoft, and Nvidia. the Motley Fool recommends Stellantis, and recommends the following options: long Microsoft January 2026 $395 calls and short Microsoft January 2026 $405 calls. the Motley Fool has a disclosure policy. the Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.

INVISTA Just Bought 5 Artificial Intelligence (AI) Stocks, 1 of Which Is Up 142%his article was originally published by The Motley Fool.