If artificial intelligence (AI) is the new gold rush, NVIDIA (NASDAQ: NVDA) is a leading supplier of pickaxes and shovels.The strong demand for Nvidia's graphics processing units (GPUs) is surprising.
But NVIDIA isn't just helping big companies build and deploy AI models: The company has also invested in some of the brightest companies in the AI world, and according to Wall Street, these NVIDIA-backed stocks could rise by 73% to 89%.
1. Nano X-ray Imaging
Nvidia has a small stake Nano X-ray Imaging (Nasdaq:NNOX) Its market capitalization is expected to be around $583,000 as of the end of the first quarter of 2024. But Wall Street has high hopes for the small medical technology company.
Only three analysts surveyed. LSE (OTC: LNST.Y) We covered Nano-X Imaging in June. Two have rated the stock a “Buy” and a third has recommended a “Strong Buy.” Nano-X's average 12-month price target indicates an upside potential of 89%. Even the most pessimistic analyst believes the stock has the potential to rise by nearly 60%.
Nano-X Imaging develops medical imaging technology that is much more cost-effective than traditional X-ray systems, and the company also has a subsidiary, Nanox.AI, that uses AI to diagnose undetected chronic diseases.
2. Recursion Pharmaceuticals
Nvidia owns more than 7.7 million shares. Recursion Pharmaceuticals (Nasdaq: RXRX)At the end of the first quarter, the position was worth about $77 million. Recursion's stock has fallen significantly since then, but analysts believe the stock will recover.
The average 12-month target price for Recursion Pharmaceuticals is 73% above the current share price. The lowest target price has room for upside of 21%. Interestingly, however, of the six analysts surveyed by LSEG in June, only two rated Recursion a “buy.” The other analysts rate the stock a “hold.”
Recursion calls itself a “TechBio” company rather than a biotech company to emphasize its focus on leveraging technology for drug discovery and development. Its BioHive-2 supercomputer uses 63 Nvidia DGX H100 GPUs and 504 Nvidia H100 Tensor Core GPUs. BioHive-2 uses AI models to discover new drugs. It is the world's fastest supercomputer that is 100% owned and operated by a biopharmaceutical company.
3. SoundHound AI
Nvidia owns more than 1.7 million shares. SoundHound AI (Nasdaq: SOUN)The shares were worth about $10.2 million at the end of the first quarter. Soundhound has been a big winner, with its stock price nearly doubling since the start of 2024.
Wall Street sees this momentum continuing: Soundhound AI's average 12-month price target suggests upside potential of roughly 79%. Four of six analysts surveyed by LSEG in June rated the stock a “buy” or “strong buy,” while the remaining two rated it a “hold.”
Soundhound AI is the most AI-focused of the three Nvidia investments, leading the development of voice AI systems used by automakers, restaurants, smart TV makers and other companies.
Is Wall Street right about these stocks?
Wall Street analysts could be right with their predictions about Nano-X Imaging, Recursion Pharmaceuticals, and Soundhound AI. They could also be completely wrong. No one knows how any stock will perform over the next 12 months. But I agree with the general optimism about these two Nvidia-backed stocks.
Recursion Pharmaceuticals has some big partners. Roche and BayerThe company expects to report results from seven clinical trials, including five Phase 2 studies, over the next 18 months.
Soundhound AI's revenue continues to grow rapidly, up 73% year over year in the first quarter. The voice AI innovator targets a total market of more than $140 billion. Soundhound's customer base already includes some of the biggest names in the automotive and restaurant industries.
I'm less optimistic about Nano-X. Despite the company's promising technology, the company's revenues are declining rather than increasing.
Risk-averse investors probably won't find any of these stocks appealing — none of them are profitable at the moment — but I think aggressive investors will like Recursion and Soundhound AI in particular, as will Nvidia.
Should you invest $1,000 in SoundHound AI right now?
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.
These Nvidia-backed artificial intelligence (AI) stocks could rise 73% to 89%, according to Wall Street. This article was originally published by The Motley Fool.