DeepSeek bubble gone? Nvidia's Jensen Huang has smartly made some investment decisions that have propelled the stock to its early January levels; here they are

Nvidia stock has staged a remarkable recovery, returning to the level it achieved before the shocking $593 billion January plunge caused by China-based DeepSeek's AI chatbot, as per reports. The company has been able to shore up its shares by making big changes in its portfolio, reported The Street.

Nvidia’s investment portfolio

Nvidia, led by CEO Jensen Huang, has established itself as a leader in the AI chipmaking market. But beyond its core business, Nvidia also manages a smaller investment portfolio. In its most recent SEC filing, Nvidia reported changes to its holdings, one of which involved a sharp decrease in its Arm Holdings, the UK chip designer that Nvidia had earlier tried to buy for $40 billion in 2020, as per The Street.

As of the end of 2024, Nvidia's holding in Arm was 1.1 million shares, down 44% from the last quarter. This amounts to approximately $181 million in value, as per the report.

Could Arm’s move spark more competition for Nvidia?

Arm is moving more directly into competing in the market by creating and marketing its own processors, something that would place the company directly in competition with big clients such as Nvidia, Apple, and Qualcomm, reported Reuters.

JPMorgan analyst Harland Sur pointed out that SoftBank, the largest shareholder of Arm, is planning to invest in the US AI venture Stargate. This move could eventually put Arm in direct competition with Nvidia, as per Reuters.

However, Sur suggested that Broadcom might actually stand to benefit the most from these developments, reported Reuters. The company has become a leader in custom AI chips, offering a more cost-effective and efficient alternative to Nvidia’s high-powered GPUs.

Sur claimed that “With the stepped-up focus on compute efficiency (thanks to DeepSeek), we can see these AI ASIC programs being accelerated to further augment compute efficiency and drive a more aggressive cost/compute curve," as quoted by The Street.

Nvidia's new investment strategy

In addition to reducing its stake in Arm, Nvidia took some new steps in its investment strategy. According to The Street, the company announced a new investment in China's WeRide, an autonomous vehicle tech leader. Another new investment is in Nebius Group, an AI technology company renamed from Russia's Yandex.

As per The Street, Nvidia has shut down past positions in Serve Robotics and SoundCloud, which were both previously included in last year's 13-F reports. The shutdowns indicate strategic rebalancing, with Nvidia focusing more intently on artificial intelligence and self-driving cars, as per the report.

Investors respond positively to strategic shifts

Investors appear to be welcoming these changes. Nvidia shares were up 1.9% in premarket trading as investors look ahead to its coming Q4 earnings report, in which analysts project revenues to rise around 66% to $24.5 billion and net income surging 62% to $20.85 billion, according to The Street.

FAQs

What’s driving Nvidia's stock recovery?
Nvidia has bounced back from its January plunge due to smart moves in its investment portfolio.

What are Nvidia’s recent investments?
Nvidia has made investments in companies like WeRide, a leader in autonomous vehicle technology, and Nebius Group, an AI company.