Nvidia Has $71 Million Invested in These Smaller-Cap AI Stocks

Core Viewpoint - Nvidia is experiencing tremendous demand for its GPUs across various sectors, leading to significant excess revenue, which the company is strategically investing to enhance product adoption [1] Group 1: Nvidia's Investments - Nvidia's third-quarter 13F filing revealed it holds 1.7 million shares of SoundHound AI valued at $8 million and a new position in Applied Digital worth $63 million [2] - Both SoundHound AI and Applied Digital have a symbiotic relationship with Nvidia, enhancing its market presence [2] Group 2: SoundHound AI - SoundHound AI has a market cap of approximately $2.3 billion and its stock price has nearly tripled over the last 12 months [4] - The company reported a revenue growth of 89% year over year in Q3, partly due to the acquisition of Amelia, expanding its technology into new markets [5] - SoundHound is collaborating with Nvidia to provide voice AI assistance and is gaining traction in the electric car market, with Stellantis utilizing its technology [6] - The company reported an adjusted net loss of $15 million in Q3 but aims for profitable growth by the end of 2025 [7] Group 3: Applied Digital - Applied Digital has a market cap of around $1.8 billion and its stock has increased by 112% over the past year [9] - The company builds data centers for AI, cloud services, and cryptocurrency mining, with a revenue growth of 67% year over year last quarter [10] - Despite reporting an adjusted net loss of $4 million, Nvidia's investment is crucial for Applied Digital's growth, enabling it to finance high-return projects [11] - Applied Digital is finalizing a lease for a 369,000-square-foot facility designed for AI workloads [12] - The cloud service segment generated nearly half of the company's revenue last quarter, indicating strong growth potential [13] - The company reported a profit of $20 million on an adjusted EBITDA basis, with a reasonable enterprise value-to-EBITDA ratio of 21, suggesting potential for excellent returns [14]