Nvidia Injects $50M into AI Drug Discovery Firm Recursion

0:00What can 160 years of experience teach you about the future? When it comes to protecting what matters, Pacific Life provides life insurance, retirement income, and employee benefits for people and businesses building a more confident tomorrow. Strategies rooted in strength and backed by experience. Ask a financial professional how Pacific Life can help you today. Pacific Life Insurance Company, Omaha, Nebraska, and in New York. Pacific Life and Annuity, Phoenix, Arizona. I feel like you're going to get sick of this intro. I sound a bit like a broken record when I say one of my favorite things about AI is healthcare and how it's going to help with drug discovery and blah, blah, blah.

0:39I have this whole spiel. If you've listened to other podcasts, if you're new here, well, that's a spiel. If you're not new here, you've heard me say that many times. But today is another case where I really think AI is going to do some awesome things. Today, we have a really exciting move. GPU giant NVIDIA is going to drop$50 million into a biotech startup. As you know, I absolutely love this space. I think biotech's amazing. $50 million is a big play, especially when it's coming straight from one company. You know, you see a lot of times where these new startups are gonna put together rounds that are based off of, you know, a number of different investors.

1:13And when you see one where it's essentially one investor putting a big chunk of money into another company, you kind of have to start thinking about like what the strategic alliances here are. NVIDIA, this is kind of a no-brainer for them, in my opinion. It does two things that is gonna really help NVIDIA. Number one, putting$50 million into any startup that uses a lot of GPUs. So this startup evidently is going to be trained with a lot of AI models. So they're going to have to buy GPUs from NVIDIA and other chips and other compute. And so NVIDIA oftentimes directly makes their money back. In fact, I've heard some investors go so far as to say a lot of these investments NVIDIA is making is juicing the numbers for their stock price.

1:55It is, it's like recycling the money because they know they give it to the company and the company gives it back to them by buying their stuff. And, but then Nvidia can clock it as sales where, you know, they wouldn't be able to make those sales because that company wouldn't have enough money to make those sales otherwise. So I've heard some people say that Nvidia is juicing the numbers here, which, you know, I won't make any accusations. That's just, you know, that's word on the street. That's just me saying what other people are saying. In any case, I do think it is a smart move for the stock price, obviously, of NVIDIA, but obviously also because they want to get as many companies as they can using their GPUs and buying from them.

2:33If this company becomes successful, inevitably when it upgrades to the next version or when it wants more compute power and NVIDIA comes up with their new chips, they're going to be buying those as well. So they want to get them on the NVIDIA ecosystem and they want to lock them in. So this does make a lot of sense. In any case, Recursion is essentially an AI startup that is a drug discovery engine. So this announcement, which hit the wires on Wednesday, pushed Recursion's stock up 83%. So that is massive. And that is giving its investors definitely a big reason to celebrate. I hate to talk about these kind of big announcements from companies, like the fact that NVIDIA gave like invested in their company as like and then boosted their stock is like that's the story because I don't think that should be the story the story should obviously be what the company does afterwards I hate the whole hype around like I hate it when people base their perceived value of a company off of how much hype it gets in the news how much their stock price went up because and at the end of the day that isn't adding like a lot of value to their niche or industry what's adding value to the niche or industry is when they have amazing output so let's talk about some of those recursion currently counts um ai luminary yoshua banguio among its advisors is going to harness the colossal amount of biological and chemical data on its hands which is over 30 no sorry over 23 000 terabytes to train sophisticated ai models on nvidia's cloud platform so right here boom that's the reason they're doing it they're going to be on nvidia's cloud platform, they don't even have to go and buy the GPUs from NVIDIA, they can just jump on their cloud platform.

4:16And so when NVIDIA gives them$50 million, they know they're going to spend that right back. I believe GPT-4 took around$63 million to train. And so, you know, this thing might not be quite as sophisticated. And, you know, hopefully it takes half of that to train. But either way, NVIDIA knows they're going to be making a lot of that money back immediately. Similar to, you know, a move Google Cloud paid$3 million into Anthropic, and then Anthropik said we're going to be training on Google Cloud. So it's the same kind of move. We're going to see a lot of these, I predict, in the future because, you know, as it were, it is juicing the numbers in a sense that it keeps pushing NVIDIA's stock up more.

4:52And oftentimes when NVIDIA puts a$50 million investment into a company like this, it boosts NVIDIA's stock, you know, like 10x, like$500 million. Or even if it only boosted their stock$100 million, it's worth it for them. They're making money just off of these investments, which they know are long-term good for their ecosystem and for the market. So in any case, I think it's a powerful combination of machine learning and bioscience that could pave the way for accelerated drug discovery that Recursion is currently trying to develop. One of the biggest winners from the ongoing AI revolution, NVIDIA, is also set to gain even more from this arrangement.

5:29I think the chipmaker plans to license these freshly minted models to biotech firms via BioNeomo, its new generative AI cloud service for drug discovery that was launched earlier this year. So obviously, this is a strategic partnership for the sense that, you know, this company is going to be training models on its platform, but it's also going to be able to take these and license them. So as part of the investment deal, Recursion handed over 7.7 million of its Class A common shares to NVIDIA, which is translating to around 4 % equity in the biotech firm. So, you know, good move on their part.

6:01recursion runs the recursion os which is an innovative platform providing critical data sets to pharma companies for designing and formulating new therapeutic drugs i think it's worth noticing noting that this move comes on the heels of recursion snapping up a pair of companies in the ai driven drug discovery arena for 87.5 million in may which they're really doubling down on their commitment to AI in biotech. But, you know, what's interesting here is they literally went and spent$87 million to go and buy a couple companies, and then they received a$50 million investment. And it's like, it's kind of interesting, but then when you look at the fact that their stock price went up from this$50 million investment, 83%, you know that the 4 % they gave away to NVIDIA, whatever that deal is worth, is obviously that 83 % pump in stock price made them way more money than probably the$50 million investment, which is kind of a funny thought.

7:04With NVIDIA software in its arsenal, I think Recursion really is kind of aiming to bolster not only its own drug discovery pipeline, but also those of some of its partners. I think it's currently partnering with and collaborating with a bunch of other you know big heavy hitters they have Bayer they have Roche they have uh the Salt Lake City Utah based firm uh Roche which is currently running human trials for five of its drugs one of which is in mid-stage trials targeting a neurovascular disease triggered by malformed small blood vessels in the brain so I think back in recursion's really exciting journey in the biotechnics space are a lot of prominent investors they have a lot of big big players in the space They got Abu Dhabu Sovereign Investor, Mubadala, and also the UK-based investment firm, Baidi Gifford & Co.

7:57The announcement has made some major positive impacts on recursion stock price, like we mentioned earlier. Shares, I think, went up to around$12.40 among heavy trading volumes. If this momentum continues, I think it could mark the best day for recursion's share price since listing back in 2021. I think it's a pretty exciting ride for the biotech firm and proof that this is really a big play to be made between AI and life sciences. I think they're excited and a lot of other people looking at this space are pretty excited to see what the implications of this are. Overall, I'm really bullish on the way that drug discovery is going to be impacted by AI.

8:36What's interesting here is this isn't just NVIDIA benefiting from it. This isn't just recursion benefiting from it. This software is going to be licensed to Bayer and all of these other major companies. And so overall, I think with everyone collaborating, we're going to see a lot of really positive impacts in drug discovery. Hopefully, a lot of incredible medicine will be developed in the near future based off of, you know, help from AI to speed up the whole process. And we're going to be seeing some amazing cures to some, you know, previously unsolved diseases and things that people were previously unable to overcome.

9:07So this is a very exciting time to be in AI, in healthcare, and in biotech.