Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
On Thursday, Nvidia (Nasdaq: NVDA) released its quarterly 13F portfolio filing for Q3 2024. Compared to the last quarter of 2023, the AI/GPU chipmaker’s holdings nearly doubled from $230 million to now $433 million.
This is to be expected as in the latest earnings report on August 28th, ending July 2024, Nvidia reported holding $8.57 billion in cash, cash equivalents and restricted cash. This is 45% greater than the $5.88 billion from the year-ago quarter.
But which companies is Nvidia the most interested in to apportion some of that cash?
Nvidia’s Holdings Are Now Spread Out Across 6 Companies
Of the total $433 million holdings value, Nvidia picked six companies with the following weight from largest to smallest:
Arm Holdings plc (Nasdaq: ARM) at $280.41 million
Applied Digital Corp. (Nasdaq: APLD) at $63.65 million
Recursion Pharmaceuticals, Inc. (Nasdaq: RXRX) at $50.78 million
Serve Robotics, Inc. (Nasdaq: SERV) at $29.63 million
SoundHound AI, Inc. (Nasdaq: SOUN) at $8 million
Nano-X Imaging LTD (Nasdaq: NNOX) at $362,563
From the previous Q2 portfolio filing, Nvidia’s shares count for the 5 companies remains the same. This quarter, Applied Digital is the 6th new addition with 7.7 million APLD shares.
How Have Existing Nvidia Holdings Performed?
From the insider cashing out period in March, when SOUN stock dropped to $6.68, its value remained relatively flat, now priced at $6.48 per share. Although having beaten the earnings per share (EPS) estimate in Q3, the voice-enabled AI company still failed to clearly outline its profitability threshold in 2025.
Since the in-depth coverage of Serve Robotics at the end of July, SERV stock went down from $16.46 to now $8.14 per share. At the time, we noted that the company has to tackle rampant urban crime and high cash burn if it were to sustainably expand its delivery robots.
On the other hand, Arm Holdings performed well since the selloff in November 2023, with ARM stock going up from $55 to now $129 per share. With heavy funding from the Japanese multinational SoftBank, the British chip designer is expected to launch its first AI chip by spring 2025, followed by TSMC-facilitated mass production by the end of the year.
In the meantime, however, Bernstein investment firm recently downgraded ARM to “underperform” while maintaining the price target of $100 per share.
Over the last three months, Nvidia’s biotech picks underperformed. Utilizing AI for its rare disease drug development, RXRX stock flatlined at positive 1.27% returns. The AI-powered medical imaging firm Nano-X returned negative NNOX performance at 18% for the same period.
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Why is Nvidia Interested in Applied Digital?
Headed by CEO Wes Cummins, Applied Digital operates blockchain and high-performance computing (HPC) data centers, typically used for AI/ML training. The company concluded its initial public offering (IPO) relatively recently, in April 2022. According to November’s investor presentation, AD plans to expand its data center footprint to over 1 GW worth of computing power.
Presently, Applied Digital holds two data centers in Jamestown and Ellendale, both in North Dakota with a combined capacity of 286 MW. Unlike Bitcoin mining companies, Applied Digital doesn’t operate its own mining rigs, focusing on infrastructure support instead.
By the time ChatGPT created the AI hype, the company shifted more to HPC cloud focus, having acquired 5 clusters of 1024 GPUs across third-party data centers. In August 2023, Nvidia gave Applied Digital “Elite Partner” status for its Nvidia Partner Network. This signaled to investors that Applied Digital can reliably participate in AI training and product rollouts.
In 2024, Applied Digital secured $160 million from Nvidia and other institutional and accredited investors.
Is Applied Digital Profitable?
Since going public, the company is yet to deliver a profitable quarter. In the last earnings filing ending August for fiscal Q1 2025, Applied Digital reported a net loss of $4.2 million. On the upside, the revenue went up 67% year-over-year to $60.7 million.
Nonetheless, it is likely that the lack of profitability is temporary as the company expands and achieves full booking for its cloud hosting capacity. Taking into account McKinsey & Company projections for data center growth, Applied Digital could participate in 3x demand.
Image credit: Applied Digital, source: McKinsey & Company
As of the last earnings report, the company is finalizing a lease for a 100 MW facility with 369,000 square-footprint. Purportedly, this is for one of the Big Tech companies, only referred to as “U.S.-based hyperscaler”. Which could refer to Amazon, Alphabet, Meta Platforms or Microsoft.
At the same location, Applied Digital is planning to erect two more buildings with a capacity of 400 MW. Combined with existing Ellendale and three additional campuses, this should bring the company’s HPC capacity to 1.4 GW, presumably by 2030 at the latest.
Presently, Applied Digital holds $86.6 million in cash (and equivalents) against $143.6 million worth of debt. Although having effectively flatlined at 3% YTD returns, APLD stock is up 85% over the last three months, now priced at $7.17 per share.
Against the 52-week average of $5.24, the median APLD price target is $10.5 per 7 analyst inputs collected by Nasdaq. Even the low estimate of $9 is significantly higher than the present level, while the ceiling outlook for APLD stock twelve months ahead is $12 per share.
Given that it is now easier than ever to create apps, would you host it on one of these emerging cloud platforms? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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