(Bloomberg) -- The latest sign of investors’ unrelenting demand for all things artificial intelligence related: a record rally in drug discovery firm Recursion Pharmaceuticals Inc. following an investment from Nvidia Corp.
A $50 million private investment from the AI-linked chipmaker sparked a surge in Recursion, which uses machine learning to discover new drugs. The stock more than doubled at the market open — the biggest one-day jump on record — before paring back to a 62% gain.
The rally is a sign the AI mania may finally be moving to the battered biotechnology sector which has suffered under the Federal Reserve’s interest rate hiking regime. Before Wednesday’s surge Recursion had slumped 12% year to date, shares are now up 43%.
The pact is “a meaningful validation step for the AI to drug/molecule development space in general,” said Scott Schoenhaus, an analyst with Keybank Capital Markets.
Read more: AI Drug Discovery Is a $50 Billion Opportunity for Big Pharma
Peer Exscientia Plc soared as much as 24% intraday, while Schrodinger Inc. and AbCellera Biologics Inc. jumped more than 12% each, Relay Therapeutics Inc. climbed 10%.
Baillie Gifford & Co., a money manager known for early bets on stocks like Tesla Inc. and Moderna Inc., is Recursion’s largest holder, according to data compiled by Bloomberg. Rival Cathie Wood’s ARK Investment Management also owns a stake.
Recursion has also garnered interest among short sellers this year. Short interest as a percentage of float, or how many shares have been borrowed by traders to bet against, has risen to nearly 19% from about 14% in January, according to data from S3 Partners.
--With assistance from Jameelah Robinson and Carmen Reinicke.
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