AI, AI, AI.
Nvidia's 13F filing and their new positions in ARM, Soundhound and NANO-X etc
For context, late January I wrote this piece (that went viral1) on Nvidia, the AI craze and the downside I see on the stock.
Downside at NVIDIA (and the Nasdaq at large)
“Before we work on artificial intelligence why don’t we do something about natural stupidity?” —Steve Polyak
I promised to write another piece and investigate the Nasdaq’s 10-year performance and the engine under the hood.
I concluded that the Nasdaq is in an AI-fueled typical Sorosian boom/bust — with both debt and equity leveraging.
Is the Nasdaq in a Reflexive Bubble?
Last week I wrote a small piece on the rush into A.I. — backed mainly from VC money. This was triggered by the launch of Chat GPT near the end of 2022, and by the effect the launch had on A.I-related share price valuations. The A.I. rush had begun then and there.
NVIDIA’s 13F and the next phase of the AI Theme
Yesterday February 14th, NVIDIA filed its December 31st, 2023 13F filing, disclosing a number of equity positions.
ARM Holdings is extremely expensive at these prices, but that didn’t stop NVIDIA from buying almost 2mln shares. Granted, ARM rallied massively this year, topping out just a few days ago. ARM has a current valuation of $130bln and makes ~700mln in EBIT…
NANO X IMAGING. “We aim to build a global infrastructure for medical imaging, combining powerful technologies: Our digital MEMS source, AI solutions, and teleradiology solutions for an end-to-end imaging solution”. The stock is up 60% pre-market as of now. Nvidia’s position, as you can see from COLUMN 4 above, is negligible. NANO X doesn’t make any money.
RECURSION PHARMACEUTICALS. Sitting at $76mln at y/e, and roughly 20% higher today, Nvidia holdings ~$100mln in this name
SOUNDHOUND AI. Up a staggering 88% pre-market, as we speak — Soundhound AI is a “voice AI and speech recognition company founded in 2005. It develops speech recognition, natural language understanding, sound recognition and search technologies”. Obviously, it makes no money. By the way, neither does Recursion Pharmaceuticals.
TUSIMPLE HLDGS. “TuSimple Holdings, Inc. is a Chinese autonomous trucking company, based in San Diego, California, with offices in Arizona, Texas, and China. It was founded in 2015 by Xiaodi Hou and Mo Chen. In December 2023, the company announced that it would be closing its U.S. business and moving to China.”
Nvidia reported a $3mln position y/e, down 57% Year-to-Date.
What’s the dealio?
We’ve explained in the Reflexive Bubble piece that this AI boom is fuelled by both debt and equity leveraging. But this is definitely a sign that the cycle is getting fatigued.
As if Nvidia’s VC investments, which fuel the rush into AI weren’t enough — they now need to start buying positions in the open market of AI “related” money-losing companies?
Two things can happen here, a disillusionment that Nvidia doesn’t know what to do with their money and is just throwing it around (small amounts, for now) or a narrative by empty-suit analysts that Nvidia could create massive value by buying up AI-related publicly-listed companies and help them in their journey. Note that the latter is laughable, at best.
Sincerely,
Philo 🦉