In today’s issue:
- Out with the old, in with the new
- Who are Nebius and WeRide?
- Bigfoot?
Nvidia pumps SoundHound then dumps it.
Over the last 12 months SoundHound AI has been one of the AI market’s best performers.
The company’s stock soared, as it rode the generative AI boom thanks to demand for voice-based AI creation applications in the car industry, hospitality, and consumer markets.
Its price was around $1.70 in January 2024, rising to an astronomical $24.98 in late December.
There are a few reasons for this meteoric rise.
Primarily, the company is one of the leaders in AI-generated voice services. With big deals in the automotive industry, retail and hospitality the company has been an early mover ahead of the rise of generative AI.
However, things really exploded higher for SoundHound when it was revealed in February 2024 that Nvidia owned 1.73 million shares of SoundHound.
When the market got wind of this it sent SoundHound’s stock price to a high of $10.25 by mid-March. This tie-up with Nvidia helped to drag SoundHound along for the rest of 2024, and as the AI boom continued its momentum, so did SoundHound.
Until the ride stopped last week.
The market loves it when a mega-cap giant like Nvidia with its $3.4 trillion market cap and seemingly endless supply of cash buys up another AI company.
If it’s good enough for Nvidia, it’s good enough for investors.
That’s great on the way up. But what happens when a company like Nvidia gets sick of said company and sells off its stock holding?
Here’s what:
Source: Yahoo Finance
Nvidia’s latest F-13 report (which shows its stocks holdings) from Friday had a notable absentee… SoundHound.
This absence means Nvidia sold off its stock during the quarter ended 31 December 2024.
Uh oh! As this news found its way to the market, SoundHound dumped 28%. After the Presidents’ Day holiday on Monday, it looks to continue that trend lower on Tuesday.
The big question though is, why did Nvidia sell up?
Frankly I think Nvidia sold because it made a massive profit on the stock. Remember, as the price peaked just shy of $25 in December, Nvidia was offloading.
Great trading by its team!
It also wasn’t the only company Nvidia offloaded. Based on its F-13 filing from the previous quarter, the company also sold its holdings in Nano-X Imaging and Serve Robotics.
But in selling off some stock, Nvidia also added others.
Nebius Group N.V. (NBIS) is a Dutch company that’s “building infrastructure for the AI revolution”. Its stock was up 6% in trading after the Nvidia news filtered through.
WeRide (WRD) is an autonomous driving company that develops tech for the self-driving vehicle industry. Its stock was up 83% after the Nvidia news dropped.
Are these two on a trajectory higher after the disclosure of Nvidia’s involvement? It looks like WeRide got the full “SoundHound treatment” from the market, Nebius not as much… but I wonder of the two which ends up as the better long-term investment.
I’ll take some time to get to know these two and let you know exactly what they do and why a company like Nvidia has decided to load up on them both.
But these are definitely worth keeping an eye on if the story of SoundHound decides to repeat itself over the next 12 months.
From the hive mind 🧠
- I’ll have more to say on this, but I think we’re going to reach a tipping point where highly successful businesses will have a point of differentiation that they don’t use any AI in their services. By humans, for humans.
- To be honest, when I saw the picture of this bird, I thought it was AI generated! But from saving hedgehog populations to discovering the existence of rare birds in Australia, AI does have some optimistic benefits too.
- It’s a race to open source it seems. With the release of DeepSeek’s impressive open-source AI tools, the rest of the AI world has decided this technology is something to keep under wraps. Now Perplexity is getting in on the action with its own free “deep research” tools.
Weirdest AI image of the day
ChatGPT’s random quote of the day
“The sooner we drop the idea that computers are like us, the better off we’ll be.”
– Edsger Dijkstra, 1982
Thanks for reading, see you next time.
Sam Volkering
Contributing Editor, Fortune & Freedom
How many divisions does Elon have?
Bill Bonner, writing from Baltimore, Maryland
The question was framed, according to some historians, by Josef Stalin at the Potsdam Conference. Winston Churchill had suggested that the Pope might be brought in to provide moral backing to the Allies’ campaigns against Hitler.
Stalin must have wondered how morality would hold up against Panzer tanks.
“How many divisions does the Pope have?” he allegedly asked.
We wish we could be in the room when the question comes again.
Of all the bloated bureaucracies…among all the corrupt and self-serving federales… and all their boondoggle programs – the military stands out. It fails every audit. It spends trillions, and claims not to know where the money goes.
But it goes somewhere. And those who get it know where it went. They’ve bought and paid for almost every member of the House and the Senate. They’ve put on countless half-time shows… and granted ‘access’ only to toady journalists. They expect to get their money’s worth.
In ancient Egypt, the surplus production of the Nile Valley was spent building monuments to dead rulers. In China, under the first emperor, Qin Shi Huang, much of the surplus output was spent building a Terracotta Army of more than 8,000 soldiers, intended to protect him in the afterlife.
And in America, circa 2025, ‘national defense’ is a sacred myth. Having US troops all over the world…meddling in one foreign conflict after another… trying to replace independent leaders with puppets – all in, it costs over a trillion dollars a year…and almost surely makes Americans less safe.
But now, the US firepower industry may be coming under attack. According to the Washington Post, Musk’s shock troops have crossed the Potomac:
The Trump administration has directed defense agencies to turn over a list of their probationary employees by the end of Tuesday, with the expectation that many could be laid off as soon as this week, according to five people familiar with the matter.
The directive coincides with the arrival at the Pentagon of personnel from Elon Musk’s U.S. DOGE Service, which has overseen the firing of thousands of probationary employees in other federal agencies and coordinated the dismantling of the U.S. Agency for International Development.
“Uh… you want to see our records?” the brass will ask… stunned and confused as Elon and his band of callow nerds arrive at the Pentagon.
“That’s classified,” they will reply.
“We’re here to root out waste,” Elon will explain.
“No useless aircraft? No easily sunk ships? Close unnecessary bases? Stop useless weapons development? Fire some of the three million people who get our paychecks? Tighten our belts? Cancel our beach-house plans?”
“Yeah… that’s right,” Elon might reply.
“What about our enemies?” they’ll ask.
“What enemies?” Elon will reply. “You know perfectly well that there is no country on earth capable of crossing the ocean with a viable armada. They’d be wiped out by missiles and bombers before even leaving port.”
“Uh… what about Russia… China… terrorists?”
“Are you kidding? Russia has a tiny economy. China’s economy depends on selling stuff to Americans, not attacking them. And terrorists have never been anything more than a fake enemy.””
But it’s one thing to reduce spending by USAID. It’s another to reduce it for the US Army, Navy and Air Force. The last time the Pentagon had to cut its budget was after WWII. The troops came home. Soldiers were ‘de-mobed.’ Eisenhower (who knew more about the military than any president since) peeled nearly 30% off the Department of Defense outlays.
That was then…before firepower became the nation’s defining industry, with effective control over both political parties. Today, for appearances sake, the warfighters are likely to shed a few ‘probationary’ employees. Maybe they’ll sacrifice some weapons that they never wanted anyway.
But why should the world’s ‘most lethal’ fighting force take its orders from an immigrant from Africa? Sooner or later, whether voiced or tacit, the question is bound to come up:
“And how many divisions do you have, Elon?”
Regards,
Bill Bonner
Contributing Editor, Fortune & Freedom
For more from Bill Bonner, visit www.bonnerprivateresearch.com
