Nvidia Investment Sparks 78% Surge in Biotech: Debunking the A.I. Hype

**Investment from Nvidia Drives Record Rally for Recursion Pharmaceuticals Inc.**

A recent $50 million private investment from chipmaker Nvidia Corp. has triggered a surge in the stock of drug discovery firm Recursion Pharmaceuticals Inc. The company, which utilizes machine learning for drug discovery, experienced a more than doubling of its stock price at market open and ultimately closed with a record 78% gain. This rally suggests that the artificial intelligence (AI) frenzy is extending to the biotechnology sector, which has struggled amidst the Federal Reserve’s interest rate hikes. Prior to this surge, Recursion’s stock had declined by 12% year to date, but it has now risen by 57%.

**Cementing Recursion’s Position as an AI-driven Biotech Firm**

With the new funds from Nvidia, Recursion solidifies its position as a leading AI-driven biotech company. Analyst Gil Blum from Needham & Co. states that this collaboration grants Recursion access to the most powerful AI computing company in the world. Keybanc Capital Markets analyst Scott Schoenhaus also recognizes this partnership as a significant validation for the AI-driven drug development space as a whole.

**Positive Impact on Peers and Similar Companies**

The positive effects of this investment have extended to other companies utilizing algorithms for novel target discovery. Exscientia Plc and AbCellera Biologics Inc. experienced 12% jumps in their stock prices, Relay Therapeutics Inc. climbed 7.1%, and Schrodinger Inc. rose by 3.6%.

**Notable Shareholders and Interest from Short Sellers**

Baillie Gifford & Co., a renowned money manager known for making early investments in companies like Tesla Inc. and Moderna Inc., is the largest holder of Recursion’s stock. Additionally, Cathie Wood’s ARK Investment Management also has a stake in the company. This year, Recursion has also captured the attention of short sellers, with the short interest as a percentage of float increasing from around 14% in January to nearly 19% currently, according to S3 Partners data.

**Conclusion**

The investment from Nvidia Corp. has sparked a rally in Recursion Pharmaceuticals Inc., propelling the company’s stock price to record highs. This significant development signifies the growing demand for AI-related investments and signals a potential turnaround for the struggling biotechnology sector. Recursion solidifies its position as a leading AI-driven biotech company, gaining access to Nvidia’s powerful AI computing capabilities. The positive impact of this investment extends to other companies using algorithms for target discovery. Notable shareholders include Baillie Gifford & Co. and ARK Investment Management, while short sellers have also taken an interest in Recursion. Overall, this investment marks a meaningful step for the AI to drug/molecule development space.