What happened
Shares of Recursion Pharmaceuticals (RXRX -4.05%) were skyrocketing 82% higher this week as of the market close on Thursday, according to data provided by S&P Global Market Intelligence. The huge surge came after the biotech announced on Wednesday morning that it's entering into a collaboration with Nvidia (NVDA -4.08%).
The giant chipmaker is investing $50 million in Recursion, and the two companies plan to use Nvidia's cloud services to speed up the development of AI foundation models for drug discovery.
So what
Recursion immediately benefits in two key ways from its deal with Nvidia. First, the infusion of $50 million in cash improves the company's financial position. Recursion ended the first quarter of 2023 with cash and cash equivalents of a little over $473 million.
Second, and perhaps more important, the collaboration with Nvidia puts Recursion into the spotlight in a major way. Nvidia ranks as one of the hottest AI stocks on the market right now after more than tripling year to date.
Now what
It remains to be seen how significant the Nvidia agreement will be for Recursion over the long term. However, there's a real chance that this could be a pivotal moment for the small biotech.
Recursion CEO Chris Gibson is certainly optimistic. He stated in a press release that Recursion plans to work with Nvidia to "create groundbreaking foundation models in biology and chemistry at a scale unlike anything that has ever been released in the biological space."
Those could just be the words of a CEO hyping his company. But they could also be a prediction that could lead to huge profits down the road.
