You’ve almost certainly heard the term “smart money,” usually in reference to Wall Street’s most proven investment managers. This label isn’t necessarily limited to money managers, though. Any organization that picks stocks can be “smart” for any number of reasons, including its sheer expertise on a particular topic or industry.
Enter Nvidia (NASDAQ: NVDA). It’s clearly a leading expert on artificial intelligence (AI), having manufactured the computing processors at the heart of most AI platforms (not to mention partnering with other technology companies to improve these systems). If this company invests in a particular AI stock, it’s a pretty big deal.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
With that as the backdrop, know that Nvidia — through its venture capital arm NVentures — now owns 833,325 shares of a small biotechnology company called Generate Biomedicines (NASDAQ: GENB). Here’s the deal.
What’s Generate Biomedicines?
With a market cap of only $2 billion and no significant revenue yet, this pre-profit company isn’t exactly a household name. You’ve probably never even heard of it, in fact.
But that’s not the point. Neither is the fact that Nvidia’s $13 million stake in the up-and-coming company is practically nothing compared to its current $80 billion war chest. The point is, Nvidia has heard of it — and likes it enough to take a position.
Then again, Nvidia has a (very) in-depth understanding of this company’s business.
Generate Biomedicines isn’t a biotechnology outfit in the usual sense of the word. It’s actually the developer of an AI platform that digitally tests how a prospective drug molecule might perform as a treatment for a particular disease.
And it’s no mere theoretical idea. The platform is up and running, launching the development of real drugs in real clinical trials. As of the latest update, four drug candidates are in Generate Biomedicines’ pipeline, with one in phase 3 testing. That’s GB-0895, for the treatment of severe asthma.
Of course, there’s no limit to the number of such tests the company’s technology can perform, whether with a partner or on its own. It and its drugmaking partners just need to come up with worthy ideas to test.
Creating a massive opportunity
To be clear, this AI-powered testing isn’t a replacement for actual clinical testing; the United States’ FDA and other countries’ regulatory bodies still require proof that a drug is safe and effective to use in a real-world setting.
