Introduction:
In an article a few months ago, the RockFlow research team summarized the true Competitive Edge of NVIDIA, a leading AI company, and why we believe that NVIDIA is not only a great company, but also a potential investment target with high returns.
In fact, in addition to NVIDIA itself, the key tracks and companies it invests in and focuses on are also repeatedly sought after by the US stock market. The market believes that NVIDIA's investment decisions are based on a deep understanding and forward-looking judgment of the development of AI technology, often representing the direction of industry development, and companies that receive its investment may enjoy multiple benefits such as technical support, chip supply, and ecological resources. Therefore, NVIDIA concept stocks are expected to share the huge dividends of AI transformation, which is particularly worth paying attention to.
In this article, the RockFlow investment research team will provide you with an in-depth analysis of the concept stocks held by NVIDIA, helping you understand their long-term investment value and feasible investment strategies (Note: This article does not include ARM as a research target, it is also one of NVIDIA's holdings, but its market value has already exceeded $100 billion and does not belong to the range of hundreds of millions to billions studied in this article).
1. Serve Robotics (SERV) , focuses on developing automatic delivery robots
What do AI leader NVIDIA and the world's largest ride-hailing platform Uber have in common? The answer is that they both favor an autonomous delivery robot company.
Uber has partnered with 14 different companies to develop its autonomous driving platform as it looks forward to the mobile industry getting rid of human drivers. Technologies such as autonomous driving and robotics are driven by AI, and Nvidia has also developed its own autonomous driving platform. Together, the two have chosen to invest in SERV, a $600 million company that develops autonomous delivery robots. Together, they own over 20% of SERV's outstanding shares, indicating that they are optimistic about the company's prospects.
In most cities in North America, the efficiency of existing last-mile delivery solutions is quite low. Companies like Uber Eats and DoorDash rely on delivery drivers who usually use cars to deliver food and other products to customers. SERV once raised a thoughtful question: Why use two-ton cars to transport two-pound Mexican burritos?
Robots and drones may be better solutions. SERV states that hardware and software costs related to developing AI and automation are rapidly decreasing, making robots an increasingly economical choice. It predicts that once the adoption rate of robots continues to increase and the business scale expands, the cost per delivery will eventually be as low as $1.
SERV's robots have Level 4 autonomous driving capability, which means they can drive on sidewalks in designated areas without human intervention. Since early 2022, the company's robots have delivered over 50,000 orders to more than 400 restaurants in Los Angeles, with a reliability rate of up to 99.94%. SERV says this makes the robots 10 times more reliable than human drivers.
The company's latest Gen3 robot is the smartest and fastest robot to date, with a top speed of up to 11 miles per hour. Thanks to NVIDIA's Jetson Orin technology, which includes the hardware and software required for advanced robotics and computer vision, the Gen3 is five times more powerful than the previous generation of SERV robots. It has a faster top speed, greater range, and longer operating time, all of which means a 50% reduction in operating costs.
According to the contract signed with Uber, SERV is committed to deploying 2,000 new robots by the end of 2025, which will expand it to other areas of California, as well as Dallas and Fort Worth in Texas. This is also a victory for Uber. If the plan is successful, the company will save money by reducing the use of manual delivery drivers.
SERV was previously spun off from Postmates, which was acquired by Uber, and became an independent entity in 2021. However, Uber remains SERV's largest investor, holding 12% of the stock. Nvidia has invested in SERV since 2022 and currently holds 10% of the stock.
RockFlow's investment research team believes that its long-term investment value is mainly reflected in factors such as leading technology, huge market potential, long-term cost advantages compared to manual delivery, and clear business models. In the future, with the continuous growth of automation demand, SERV will have more application scenarios to expand.
2. Nebius Group (NBIS), Emerging AI Cloud Service Provider
Nebius is a Cloud Service and AI infrastructure service provider. On December 2, 2024, the company announced the completion of a $700 million financing round, with participation from venture capital firms Accel, NVIDIA, and Orbis Investments. The proceeds from the financing will be used to further build large-scale GPU clusters, expand the Cloud Computing Platform, and provide developers with more tools and services to fully support the innovative development of global AI pioneers.
NBIS's AI services rely heavily on NVIDIA's high-end GPUs. This financing will provide momentum for NBIS, accelerate the construction of more advanced AI infrastructure, and deepen its strategic partnership with NVIDIA. With NVIDIA's advanced technology support, NBIS can provide customers with more efficient and powerful computing platforms, thereby enhancing competitiveness in multiple key areas such as Cloud Services, Big Data Analysis, and AI development.
NVIDIA's technological advantages have significant strategic value for NBIS. By acquiring NVIDIA's latest GPU and AI acceleration hardware, NBIS can not only enhance its infrastructure's computing power, but also quickly adapt to the growth of global AI application demand, providing customers with efficient and scalable solutions.
In fact, NBIS became a certified partner of NVIDIA as early as Q3 2023. It has already deployed a large number of NVIDIA H100 GPUs for AI training, and the two parties have deep cooperation and jointly developed enterprise-level AI solutions.
RockFlow's investment research team believes that the long-term investment value of NBIS includes the growth potential of the AI and Cloud Service markets, competitive technological strength in the AI infrastructure field, high-quality enterprise customer base, advanced technology support from NVIDIA, and sustained revenue from subscription models. Therefore, its future performance is worth looking forward to.
3. SoundHound AI (SOUN), AI empowers voice for strong growth
As a super bull stock in the AI sector this year, SoundHound AI's stock price has soared by more than 600%, surpassing NVIDIA.
SOUN disclosed a record high third-quarter revenue last month and raised its full-year revenue forecast, citing the company's successful expansion of its target market. CEO Keyvan Mohajer stated in the third-quarter financial report statement: "We believe that speech is an extremely attractive application in applied generative AI."
During the earnings call, SOUN updated the progress of its Polaris large-scale language model. Mohajer said that Polaris has taken the company's proprietary Automatic Speech Recognition technology to new heights. Polaris learns based on billions of real conversations accumulated by the company over the years and over 1 million hours of audio files in dozens of languages. They have put Polaris into practical applications, and the results are excellent. Accuracy has significantly improved while reducing hosting costs. It is said that Polaris currently handles about one-third of the AI interactions handled by SOUN for catering customers.
In addition, NVIDIA is not only a shareholder of SOUN, but also its partner. Earlier this year, SOUN announced an in-car voice assistant that uses a large language model and operates on NVIDIA's DRIVE technology.
SOUN's outstanding performance has attracted numerous funds. Investors believe that its AI voice products have strong demand in various industries such as automobiles, catering, Financial Services, healthcare, and insurance, and SOUN has the ability to continuously improve the industrial diversification of its solutions.
RockFlow research team believes that given the rapid progress of SOUN's AI business, not only has it launched a new generation of automatic speech recognition engine and developed a multilingual real-time translation system, but its AI assistant has also been used to handle complex conversations. In the future, it will continue to expand vertical industry applications, thereby bringing more revenue conversion.
4. Applied Digital (APLD), AI Cloud as Service Company to Benefit from Increased Computing Demand
APLD designs, develops, and operates digital infrastructure solutions and Cloud as a Service, high-performance computing, and AI industries in North America. In September of this year, the AI cloud company received $160 million in financing from investors including NVIDIA and related companies. According to statistics, NVIDIA's total shareholding in digital infrastructure solution developer APLD is about 7.72 million shares, worth about $63.66 million, equivalent to 3% of APLD's stock.
In the wave of artificial intelligence, NVIDIA has been increasing its investment to support companies using its chips. As for APLD, it has a close relationship with NVIDIA: as early as July 2023, it announced a partnership to build an AI supercomputing center, not only purchasing a large number of NVIDIA H100 GPUs, but also obtaining NVIDIA technical support certification.
In the past few quarters, APLD's AI business development has been very successful. Not only have they built multiple AI computing clusters and provided AI Model Training infrastructure, but they have also developed sustainable energy AI computing solutions and continuously expanded AI Cloud as a Service. In July 2023, APLD signed a huge contract with Character.AI, which is a well-known case. In December 2023, APLD announced a long-term contract (without disclosing the customer), demonstrating the market's confidence in its business.
RockFlow research team believes that with the growth in demand for AI computing power, APLD's stock price will also bring surprises.
5. Nano-X Imaging (NNOX), AI medical care, auxiliary diagnosis is expected to play a greater value
AI healthcare company Nano-X Imaging has developed a commercial-grade tomography device with a digital X-ray source, providing remote radiology services and developing AI applications for real-world medical imaging applications.
More importantly, the company's Nanox. CLOUD can use a matching engine to match medical images with radiologists, providing image repositories, connections to diagnostic-assisted artificial intelligence systems, billing, and reporting. Its MARKETPLACE platform can provide AI-based software imaging solutions for hospitals, health maintenance organizations, comprehensive medical networks, pharmaceutical companies, and insurance companies, aiming to identify or predict undiagnosed or underestimated medical conditions such as osteoporosis and cardiovascular disease by mining data from existing computed tomography images.
This company has received funding led by Foxconn and SK Telecom multiple times in 2020. Its relationship with NVIDIA can be traced back to last year. In Q4 2023, NNOX began using the NVIDIA Clara platform, and its AI medical image analysis has also long used NVIDIA GPUs. In addition, NNOX has long received support from NVIDIA's Medical AI Acceleration Program.
The RockFlow research team believes that NNOX's current AI progress is mainly reflected in the development of AI-assisted diagnostic systems, the launch of cloud-based medical image analysis platforms, algorithms for screening various diseases with AI, and the continuous expansion of medical image databases that can be used for AI analysis. In the future, with the expansion of AI capabilities, it will still play a huge value.
6. Recursion Pharmaceuticals (RXRX), AI-driven drug development will bring about a new revolution
From drug development to US FDA approval for marketing, it can take more than 15 years and cost up to $2.50 billion. The initial arduous task of drug development can take months to over a year to complete. After spending millions of dollars, up to 90% of candidate drugs often fail clinical trials.
RXRX utilizes AI, automated biology, high-throughput screening, and Machine Learning algorithms to identify and predict the efficacy of potential drug targets, thereby accelerating the drug discovery process. It has a huge proprietary chemical and biological database called Recursions Data Universe, with a scale of over 23 PB, including data on proteins, genes, and pathways related to diseases. Its Recursion Map contains billions of searchable chemical and biological inferences, and can conduct millions of wet laboratory experiments per week.
RXRX can evaluate potential drug failures earlier, saving millions of dollars and bringing drugs to market faster and more efficiently. RXRX has established partnerships with Bayer and Roche Holding Company.
In July 2023, NVIDIA invested $50 million in RXRX to help accelerate the development of its AI drug discovery model. In February 2024, NVIDIA officially announced that it held about $76 million of RXRX stock. RXRX has long used the DGX SuperPOD system developed by NVIDIA, and the two are also jointly developing a digital biological platform.
RockFlow's research team believes that AI innovation still has great potential in medical applications and drug development, including building biological data mapping technology, AI-driven drug discovery platforms, machine learning to predict drug effects, and laboratory automation. RXRX is involved in all of these areas, and its future is still full of considerable value-added potential.
7. Conclusion
RockFlow's investment research team believes that tracking NVIDIA's holdings of concept stocks has important reference value. Investors can continue to pay attention to NVIDIA's increase in holdings, AI monetization progress, revenue growth and gross profit margin changes, new product/service releases, and changes in the industry competition landscape. From past stock price fluctuations, NVIDIA's new investments, technological breakthrough announcements, and performance turning point confirmation are all good entry opportunities.
However, it should be reminded that rational analysis is needed when investing, focusing on the company's fundamentals and long-term development capabilities, and avoiding simple follow-up speculation. In addition, diversified investment, setting stop-loss, and regular rebalancing are also important strategies for risk control.
Author Profile:
The RockFlow research team has a long-term focus on high-quality companies in the US stock market, emerging markets such as Latin America and Southeast Asia, and high potential industries such as encryption and biotechnology. The core members of the team come from top technology companies and financial institutions such as Facebook, Baidu, ByteDance, Huawei, Goldman Sachs, CITIC Securities, etc. Most of them graduated from top universities such as Massachusetts Institute of Technology, University of California, Berkeley, Nanyang Technological Institute, Tsinghua University, and Fudan University.
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