Nvidia (NVDA 6.18%) announces its fourth-quarter and full-year 2023 results this week. It's likely to report full-year revenue in the ballpark of $60 billion. Roughly 45% of whatever revenue the chipmaker generates will roll to the bottom line.

We now know more details about how Nvidia is putting some of its huge profits to work. The company revealed last week that it has invested in five artificial intelligence (AI) stocks. Here they are -- and I'll highlight which is the best of the bunch.

1. Arm Holdings

Back in 2020, Nvidia announced plans to acquire what is now Arm Holdings (ARM 4.11%) for $40 billion. That deal ultimately fell apart because of regulatory challenges. However, Nvidia now owns a small stake in Arm following a purchase of around 1.96 million shares that are currently worth over $250 million.

Arm's CPUs are used in over 99% of the world's smartphones. CEO Rene Haas said in Arm's fiscal 2024 third-quarter conference call earlier this month that the company is "seeing strong momentum and tailwinds from all things AI." He specifically mentioned that Arm's technology is being used in Nvidia's Grace Hopper 200 AI superchip and Alphabet's Google Gemini Nano Pixel 6.

2. Nano-X Imaging

Nvidia merely nibbled with its new position in Nano-X Imaging (NNOX 0.45%). The huge chipmaker purchased 59,632 shares that are currently valued at more than $770,000. That amounts to pocket change for Nvidia.

What does Nvidia like about Nano-X? The company developed a digital X-ray machine that can dramatically cut the costs of medical imaging. It's also using AI to help diagnose patients, receiving U.S. Food and Drug Administration clearance for technology that identifies patients at risk of coronary artery disease.

3. Recursion Pharmaceuticals

Recursion Pharmaceuticals (RXRX 3.57%) ranks as Nvidia's second-biggest recent AI investment, trailing behind only Arm Holdings. Nvidia bought over 7.7 million shares of Recursion worth close to $230 million today.

There's been a lot of buzz in recent years about the use of AI in speeding up drug development. Recursion's technology has also demonstrated how much AI can help. The biotechnology company's pipeline features five programs in clinical testing. Its big pharma partners include Bayer and Roche.

4. Soundhound AI

For a company with AI in its name, Soundhound AI (SOUN 5.77%) has performed dismally over the past 12 months. However, Nvidia's small investment in the company (roughly 1.73 million shares now worth around $6.6 million) provided a big boost.

Soundhound AI is a leader in voice AI. Its technology powers AI systems used in vehicles made by major carmakers including Honda, Kia, and Stellantis (which markets Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati, and more). Soundhound is also a major player in the restaurant technology market, with customers including Krispy Kreme and White Castle.

5. TuSimple Holdings

Nvidia also recently bought nearly 3.47 million shares of TuSimple Holdings, a stake now valued at over $13 million. TuSimple is the smallest company in which Nvidia has invested, with a market cap of a little over $130 million. It's also the only Chinese company in the group.

TuSimple develops autonomous semi trucks. Its self-driving trucks have logged around 10 million miles to date. The company is especially targeting China and Japan, both of which have encouraging regulatory environments for autonomous trucks.

Best of the bunch

We can use a process of logical elimination to pick the best of these Nvidia investments. TuSimple can be quickly removed from contention. Last month, the company announced its plans to delist its stock from the Nasdaq stock exchange and become privately held, a move it completed in mid-February.

Nano-X, Recursion Pharmaceuticals, and Soundhound AI remain unprofitable. All three companies could have great potential over the long run, but I think their financial positions are problematic.

That leaves Arm Holdings as the best of the bunch. The company's business continues to deliver solid growth. AI will almost certainly provide a major tailwind for Arm for years to come. While Arm beats out the other four recent Nvidia investments, though, its valuation is concerning. Shares now trade at a forward earnings multiple of over 81.

My view is that investors looking for a great AI stock to buy will be better off going with Nvidia itself rather than Arm, Nano-X, Recursion Pharmaceuticals, or Soundhound. It has strong growth prospects. It's highly profitable. And while its valuation could seem pricey, Nvidia stock is still much cheaper than Arm.