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Nvidia Divests from AI Firms, Triggering Stock Plunge

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  Published in Stocks and Investing on Wednesday, February 18th 2026 at 13:56 GMT by Investopedia
      Locales: UNITED STATES, UNITED KINGDOM, JAPAN, CHINA

Wednesday, February 18th, 2026 - Nvidia, the semiconductor behemoth at the heart of the artificial intelligence revolution, continues to reshape its investment strategy, recently completing the sale of its stakes in several key AI-focused firms: Cohere, Recursion Pharmaceuticals, and Graphcore. The moves, revealed through regulatory filings over the past year, have demonstrably impacted the stock performance of the divested companies, raising questions about Nvidia's long-term vision and the prospects for these formerly backed ventures.

As of today, February 18th, 2026, the fallout from Nvidia's divestment is still being felt. Data indicates that since Nvidia's initial stake disclosures in 2024, Cohere's stock has fallen approximately 45%, Recursion Pharmaceuticals has plummeted over 68%, and Graphcore has experienced a staggering 75% decline. These declines significantly underperform the broader AI sector and highlight the weight Nvidia's confidence (or lack thereof) carries within the market.

A Strategic Pivot Towards Core Competencies

The rationale behind these sales appears to be a deliberate refocusing on Nvidia's core business: designing and manufacturing the AI chips that power the current explosion in artificial intelligence applications. CEO Jensen Huang explicitly stated during the Q4 2024 earnings call, and reiterated in subsequent investor briefings, that the company is prioritizing capital allocation towards expanding its data center infrastructure and enhancing its chip production capabilities. This prioritization, while logical given Nvidia's explosive growth in the data center market, comes at the expense of maintaining a diverse portfolio of venture capital investments.

Analysts suggest that Nvidia's decision isn't necessarily a commentary on the viability of Cohere, Recursion, or Graphcore's technologies. Rather, it's a practical move to streamline operations and allow the company to double down on its strengths. Maintaining significant ownership in external AI companies requires resources - both financial and in terms of management oversight - that Nvidia clearly deems better deployed within its own ecosystem. The company's valuation, having soared to unprecedented heights, has also brought increased scrutiny from regulatory bodies. Simplifying its investment portfolio likely helps mitigate potential antitrust concerns, allowing Nvidia to navigate the increasingly complex regulatory landscape.

Deeper Dive into the Divested Companies

• Cohere: A leading platform for natural language processing (NLP), Cohere provides enterprises with the tools to build and deploy AI-powered language solutions. While the company has secured substantial funding and demonstrates strong technological prowess, it faces fierce competition from established tech giants like Google, Microsoft, and OpenAI. The market for large language models (LLMs) is rapidly evolving, and Cohere's ability to differentiate itself and achieve profitability remains a key concern. Nvidia's departure could signal a belief that Cohere's path to profitability is too uncertain.

• Recursion Pharmaceuticals (RXRX): A drug discovery company leveraging AI and machine learning to accelerate the identification and development of novel therapies. Recursion employs a unique 'phenotypic drug discovery' approach, using high-throughput experimentation and image analysis to understand disease mechanisms. However, the pharmaceutical industry is notoriously risky, with high development costs and a low success rate. While Recursion's AI-driven approach holds promise, it still faces the inherent challenges of bringing new drugs to market. Nvidia's decision to exit may reflect a perception of increased risk within the notoriously unpredictable biotech sector.

• Graphcore: A British semiconductor company specializing in intelligence processing units (IPUs) designed specifically for AI workloads. Graphcore represents a direct competitor to Nvidia in the AI hardware space. Despite developing innovative hardware, Graphcore has struggled to gain significant market share against Nvidia's dominant position. The company faced financial difficulties prior to Nvidia's complete divestment, and the sale of Nvidia's stake amplified those concerns. The exit may signal Nvidia's assessment that Graphcore will struggle to become a truly competitive force in the AI chip market.

Investor Sentiment and Future Outlook

Nvidia's exit undoubtedly casts a shadow over these companies, sparking anxieties among investors. While each firm possesses innovative technology, they all operate in highly competitive and rapidly changing markets. Investors are now reassessing their positions, leading to the observed stock declines. It's crucial for prospective investors to conduct thorough due diligence, understand the inherent risks, and carefully consider their own investment horizons before allocating capital to these companies.

The long-term implications of Nvidia's strategy remain to be seen. By streamlining its investment portfolio, Nvidia is betting on its ability to maintain its dominance in the AI chip market. Whether this focus will ultimately yield greater returns than a more diversified investment approach remains an open question. However, one thing is clear: Nvidia's moves are reshaping the landscape of the AI industry and forcing investors to re-evaluate their expectations.