Nvidia Sends Chinese Self-Driving Stock Up 100%, While Soundhound AI Sells Off

In a significant strategic move, Nvidia (NVDA) disclosed that it has acquired a substantial position of 1.7 million shares worth over $24 million in Chinese autonomous driving company WeRide Inc. (WRD). The news, which came via NVDA’s latest 13F filing, has sent WeRide's stock higher by more than 100% in premarket trading. 

The investment in WRD stock comes amid a broader portfolio restructuring for NVDA in Q4 2024, as the artificial intelligence (AI) chip giant simultaneously reduced its stake in Arm Holdings (ARM) and exited positions in several other tech companies - including Soundhound AI (SOUN) and Serve Robotics (SERV), which are both trading down sharply ahead of the opening bell this morning. SOUN is off 23% in electronic trading, with SERV collapsing by 38.5%.

The investment in WeRide, a self-driving startup, represents Nvidia's increased focus on autonomous vehicle (AV) technology and AI applications in the transportation sector. The timing and size of this investment suggest Nvidia sees significant potential in WeRide's autonomous driving technology, and particularly its position in the Chinese market. The market's strongly positive reaction to this news indicates investors are upbeat about the partnership potential, as well.

Shares of WRD, which debuted on the Nasdaq last October, are set to open at new all-time highs north of $30. Today’s rally looks poised to drive WeRide stock well into short-term overbought territory.

Meanwhile, NVDA is trading marginally higher ahead of the opening bell. The AI chip leader is just a couple of weeks away from reporting its latest quarterly earnings, which should be a key catalyst for the tech sector.