The artificial intelligence sector continues to see significant investor interest and company growth, though debates about market valuations persist. AI training data provider Mercor is reportedly seeking a valuation exceeding $10 billion in its Series C funding round, with annualized revenue approaching $450 million. Mercor supplies data to major players like OpenAI and Nvidia and plans to introduce new automation features. Meanwhile, Nvidia, described as the 'heart of the AI trade,' has received a 'buy' rating from D.A. Davidson, which raised its price target to $210 per share, citing strong demand for AI compute. Despite this, Nvidia's data center revenue saw its first decline in a decade, though networking sales surged. Competition is a growing factor, with firms like Scale AI also operating in the data labeling space. Investors looking for broader AI exposure can consider ETFs such as the Global X Artificial Intelligence and Technology ETF (AIQ), which includes Nvidia and Microsoft, or the iShares Future AI and Tech ETF (IXAI), featuring Advanced Micro Devices. Fund manager Denny Fish highlights Nvidia and Microsoft as top AI stock holdings, alongside Taiwan Semiconductor and Broadcom. The broader AI market is experiencing intense scrutiny, with Oracle's stock surge fueling 'AI bubble' debates, drawing comparisons to the dot-com era due to concentrated market valuations. In autonomous driving, Pony AI shares saw a 5.01% increase. SoundHound AI, a voice AI company, has received 'Perform' rating from Oppenheimer, acknowledging its technology but also noting valuation concerns and competition from large language model providers.
Key Takeaways
- AI training data startup Mercor is reportedly seeking a valuation over $10 billion in its Series C funding round, with annualized revenue nearing $450 million.
- Mercor provides AI training data to major tech firms including OpenAI and Nvidia.
- Nvidia has been upgraded to a 'buy' rating by D.A. Davidson with a $210 price target, citing strong demand for AI compute.
- Nvidia's data center revenue declined for the first time in ten years, though networking sales increased significantly.
- Investors can gain AI exposure through ETFs like Global X Artificial Intelligence and Technology ETF (AIQ), which includes Nvidia and Microsoft, and iShares Future AI and Tech ETF (IXAI), featuring Advanced Micro Devices.
- Nvidia and Microsoft are among the top AI stock holdings for Janus Henderson Global Technology and Innovation Fund co-manager Denny Fish.
- The AI market's rapid growth and concentrated valuations, exemplified by Oracle's stock surge, are sparking 'AI bubble' debates.
- Autonomous driving company Pony AI saw its shares rise 5.01%.
- SoundHound AI received a 'Perform' rating from Oppenheimer, with analysts noting its voice AI technology but also its valuation and competition.
- ASML Holding's $1.5 billion investment in Mistral AI is noted as an unusual move, with Mistral AI reportedly lagging U.S. AI peers in performance.
AI startup Mercor seeks over $10B valuation
AI training startup Mercor is reportedly seeking a valuation of over $10 billion. This comes as the company is in discussions for a Series C funding round. Mercor provides AI training data to major tech firms like OpenAI and Nvidia. The company's annualized revenue has grown significantly, reaching nearly $450 million. Mercor aims to differentiate itself by adding new automation features and an AI-powered recruiting marketplace.
Investors may fund AI data startup Mercor at $10B valuation
Investors have reportedly offered to fund AI data startup Mercor at a valuation exceeding $10 billion. Mercor, which supplies AI training data to companies like OpenAI and Nvidia, has seen rapid sales growth. Its annualized recurring revenue reportedly jumped from $100 million to over $450 million. The company prepares data using a network of over 300,000 experts and offers tools for data sourcing projects. Mercor plans to introduce new automation features to enhance its platform.
Mercor AI startup targets $10B valuation with strong revenue growth
AI training startup Mercor is reportedly in talks with investors for a Series C funding round, targeting a valuation of $10 billion or more. The company, which provides domain experts for AI model training to firms like OpenAI and Nvidia, has seen its annualized run-rate revenue approach $450 million. Mercor previously raised $100 million in a Series B round at a $2 billion valuation in February. The company plans to expand its offerings with software infrastructure for reinforcement learning and an AI-powered recruiting marketplace. Mercor also faces competition from other data labeling firms like Surge AI and Scale AI.
Invest in AI with these 3 ETFs under $100
Investors can gain exposure to the artificial intelligence boom through three exchange-traded funds (ETFs) that cost less than $100. The Global X Artificial Intelligence and Technology ETF (AIQ) offers a diverse portfolio of about 90 stocks in semiconductors, data infrastructure, and software, including Nvidia and Microsoft. The Global X Robotics and Artificial Intelligence ETF (BOTZ) focuses on robotics and AI companies like Pegasystems and Intuitive Surgical. The iShares Future AI and Tech ETF (IXAI) provides exposure to 48 global companies in AI infrastructure, cloud computing, and machine learning, such as Advanced Micro Devices and Broadcom.
3 AI ETFs to buy for long-term growth
For investors seeking exposure to the artificial intelligence sector, three ETFs offer diversified opportunities for long-term investment. The Global X Robotics & Artificial Intelligence ETF (BOTZ) invests in companies benefiting from robotics and AI, including those in industrial automation and autonomous vehicles. The WisdomTree Artificial Intelligence and Innovation Fund (WTAI) focuses on companies developing and using AI software, hardware, and services. The iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) provides access to companies involved in robotics and AI development and manufacturing across various market caps and sectors.
D.A. Davidson upgrades Nvidia, calling it 'heart of the AI trade'
D.A. Davidson has upgraded Nvidia to a 'buy' rating, citing strong demand for AI compute as a key growth driver. The investment firm raised its price target for the chipmaker to $210 per share. Analyst Gil Luria believes Nvidia's growth can be sustained into the next year and beyond, despite concerns about competition and demand volatility. The firm views Nvidia as central to the AI trade, contrasting it with Apple, which they see as lagging in the AI race. Nvidia shares have seen significant gains year to date.
Nvidia doubter D.A. Davidson upgrades AI chip giant
D.A. Davidson, a long-time Nvidia skeptic, has upgraded the AI chipmaker to a 'buy' rating with a $210 price target. The firm now believes the overwhelming growth in demand for AI compute is the most critical factor, superseding previous concerns. These concerns included hyperscale cloud spending, competition from companies like Broadcom, and potential bottlenecks. D.A. Davidson expects Nvidia to sustain growth over the next two years. This upgrade comes as investors consider both Nvidia's GPUs and Broadcom's custom AI chips.
Fund manager shares 4 top AI stocks beating S&P 500
Denny Fish, co-manager of the Janus Henderson Global Technology and Innovation Fund, shares four artificial intelligence stocks he is most bullish on. His fund has outperformed the S&P 500 over the last three years, with top holdings including Nvidia, Microsoft, Taiwan Semiconductor, and Broadcom. Fish is particularly positive on Taiwan Semiconductor (TSMC) due to its crucial role in chip manufacturing for companies like Nvidia and Broadcom. He also favors Cadence (CDNS) and KLA (KLAC) for their dominant positions in semiconductor design and process control, respectively. Additionally, Fish sees potential in Mercado Libre (MELI) for its innovative use of AI in e-commerce and fintech.
Oracle's stock surge fuels AI bubble debate
The significant surge in Oracle's share price has intensified the debate about whether the current artificial intelligence stock boom is a bubble. Oracle's stock price increased by as much as 43% in a single day, leading to a near doubling since June and a valuation nearing 50 times forward earnings. This follows Nvidia's substantial growth, making it the world's most valuable company. The market's high concentration in a few tech companies and stretched valuations are raising concerns, with some analysts comparing the situation to the dot-com era. Investor positioning also shows a high concentration in the 'Magnificent 7' stocks.
Nvidia data center revenue declines for first time in a decade
Nvidia's data center compute revenue has seen a decline for the first time in ten years, according to fiscal second-quarter 2026 data. While overall revenues remain record-high, the core GPU and CPU sales for AI infrastructure dipped slightly. This contrasts with a significant surge in networking sales, including InfiniBand and Ethernet interconnects. Export restrictions to China are also creating pressure on compute sales. Despite these trends, CEO Jensen Huang anticipates continued record years, though the revenue plateau is a concern. The company's reliance on a few major customers also highlights a potential vulnerability.
ASML Holding's $1.5B Mistral AI investment questioned
ASML Holding's $1.5 billion investment in Mistral AI is considered an unusual move compared to its past tech and supplier-focused deals. Mistral AI is noted to be lagging behind its U.S. AI peers in performance benchmarks. The report also indicates that ASML's gross margins are expected to decline in the second half of the year due to revenue recognition from high-end EUV systems and lower upgrade revenues. Analysts project a slow first half of 2026 for ASML, leading to a 'sidelined' rating from the author.
AI investing: Public vs. private company risks and rewards
Investing in artificial intelligence presents distinct risks and opportunities between public and private companies. Public markets offer liquidity and transparency, while private markets, especially late-stage venture capital, offer higher return potential but with greater risks like illiquidity and limited information. Companies like SpaceX, Stripe, and Anthropic are examples of private investments with significant potential. The current AI boom is compared to the dot-com era, with expectations of dramatic growth before a potential peak. Diversification across eight to twelve private companies is recommended for investors with a long-term horizon, risk tolerance, and ability to withstand illiquidity.
Pony AI shares rise 5% on Tuesday
Pony AI (NASDAQ:PONY) shares experienced a 5.01% increase on Tuesday. The company is a global leader in artificial intelligence focused on autonomous driving technology. While no specific news was immediately apparent for the stock's movement, Pony AI is attracting investor interest due to its position in the expanding autonomous driving market. Investors are closely monitoring technological advancements, regulatory approvals, and partnerships within the self-driving vehicle sector. The stock is trading at a higher volume, indicating increased investor activity.
Oppenheimer initiates coverage on SoundHound AI stock
Oppenheimer has begun coverage of SoundHound AI with a 'Perform' rating, highlighting its potential as a durable growth company in the voice AI space. Analysts recognize SoundHound's conversational AI platform and speech-to-meaning technology as key strengths, supported by a solid business backlog. However, Oppenheimer also noted concerns about intense competition from device makers and large language model providers, as well as SoundHound's steep valuation. The analysts believe execution will be critical for the company's success.
Sources
- Exclusive: AI training startup Mercor eyes $10B+ valuation on $450 million run rate, sources say
- Report: Investors offered to fund AI data startup Mercor at $10B valuation
- Sources: AI training startup Mercor eyes $10B+ valuation on $450 million run rate
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- Pony AI (NASDAQ:PONY) Trading 5% Higher
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