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As the artificial intelligence (AI) revolution progresses, one of the giants leading the charge is Nvidia (NVDA). The $1 trillion chip designer has been at the forefront of the AI frenzy, and its quarterly earnings report tonight is expected to move not just the broader semiconductor industry but the entire stock market. . So when Nvidia invests his $76 billion in just one small business, growth-minded investors take notice.
And while the tech giant’s investments in some smaller AI chip stocks have dominated the headlines, Nvidia’s $76 billion bet outside the semiconductor space is noteworthy for another reason. Jensen Huang’s company made a huge investment in his Nvidia holdings. The flagship fund of maverick investor Cathie Wood. In fact, given that Mr. Wood owns only 13.5 million shares of his ARK Innovation ETF (ARKK) with a current market value of approximately $170.3 million, NVDA’s stakes are higher than Mr. Cathy’s. is also quite large.
So why is Nvidia soaring in this Cathie Wood stock? Here’s a closer look.
About Recursion Pharmaceuticals Stock
Salt Lake City-based Recursion Pharmaceuticals (RXRX) was founded in 2013 by Rice University doctoral graduates Christopher Gibson and Blake Borgeson.Recursion Pharma is a clinical-stage biotechnology company aiming to “industrialize drug discovery” by using data science and automation to develop new treatments faster and more efficiently.
RXRX’s market capitalization is currently $2.72 billion.Along with existing ARKK’s 19th holding, RXRX accounts for approximately 2.17% of the fund’s weight. Russell 2000 Index (RUT).
Recursion Pharma stock rises On a year-to-date basis, it’s 23.9%, easily outperforming the broader market. Last week, news of NVIDIA’s latest investment sent the stock price up significantly. NVIDIA announced last year that it would be working with Recursion to help. Accelerate AI model training for pharmaceutical companies For drug discovery.
Recursive Revenue Preview
Recursion is not yet profitable, and in its most recent quarterly results reported a bigger-than-expected quarterly loss. But this is somewhat to be expected for a growing biotech company.
Recursion’s loss widened to $0.43 per share in the September quarter from $0.35 a year earlier. Revenue also fell 20% year over year to $10.5 million, which management attributed to this. Workflow timing through strategic partnership with Roche Genentech.
Operating costs increased 45.4% year over year to $110.1 million, which was the main driver of the larger-than-expected loss. It’s worth pointing out that R&D expenses increased by 71.4% year-on-year, and the increase in spending here is significant for a biotech company like Recursion, which needs to constantly innovate to expand and upgrade its capabilities. Generally considered a plus.
The company ended the September quarter with the following results. cash balance Long-term debt, meanwhile, remained essentially unchanged year-to-date at $44.3 million.
Recursion is expected to report earnings again on Feb. 26, with Wall Street expecting a fourth-quarter loss of $0.46 per share.
Recursion partners with Nvidia
Recursion is Develop BioHive-1, its on-premises supercomputer. It is targeted for completion in the first half of 2024 and aims to be the most powerful supercomputer owned and operated by a biopharmaceutical company.
In particular, Recursion’s proprietary RecursionOS leverages approximately 50 human cell types, an in-house chemical library of approximately 1.7 million compounds, and more than 1 trillion compounds led by a team of 550 life scientists and computational and technical experts. Access in silico libraries of small molecules. – Large datasets that can be leveraged and optimized through AI.
Recursion has also partnered with Nvidia to develop the LOWE drug discovery software and interface, which the company claims “any of our scientists can use from the comfort of their laptop.” Apart from internal use, Recursion can sell his LOWE software to other biotech companies, providing another source of revenue.
Separately, three drug candidates from Recursion Pharmaceuticals are currently undergoing Phase 2 clinical trials. REC-994 is being evaluated for safety, tolerability, and potential efficacy in treating patients with cerebral cavernous malformation (CCM), a rare neurological disease characterized by abnormal blood vessel development in the brain. Masu. REC-2282 is being studied in patients with neurofibromatosis type 2 (NF2), a genetic disease that causes tumor growth in nerves and other tissues, and REC-4881 is being studied in patients with gastrointestinal disease and certain cancer mutations. is being researched.
Finally, Recursion has been upgraded. Partnership with pharmaceutical giant Bayeron this basis Bayer will pay for recursion with increasing milestones per program. 1.5 billion dollars Royalties will be paid on up to seven oncology programs and net sales.
What do analysts expect from RXRX stock?
RXRX’s future revenue growth is pegged at 72.9%, well above the median in the Healthcare sector. However, at 55 times forward earnings, the stock is priced at a premium.
Analysts remain somewhat optimistic about Recursion stock, with the average rating from 7 covered analysts being a “fair buy.” However, the average price target of $12.33 represents just a 1.5% premium to current levels, suggesting further upside potential from here may be limited.
On the date of publication, Pathikrit Bose did not have (directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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