Companies that own more than $100 million in publicly traded stock must disclose that information in Form 13F. Those reports must be filed no later than 45 days after the end of each quarter, and they can provide clues as to how large institutions are navigating the stock market.

For instance, Nvidia sold two artificial intelligence stocks in the fourth quarter. The company cut its stake in Arm Holdings (ARM 1.04%) by 44% and exited its position in SoundHound AI (SOUN 17.48%). Those trades are interesting because certain Wall Street analysts expect big gains in the stocks:

• Timothy Arcuri at UBS has set Arm with a target price of $215 per share. That implies 65% upside from its current share price of $130.
• Dan Ives at Wedbush has set SoundHound with a target price of $22 per share, which implies 110% upside from its current share price of $10.50.

Here's a closer look at Arm and SoundHound.

Arm Holdings: 65% implied upside

Arm designs and licenses central processing units (CPUs) and subsystems to clients that develop custom chips. Its processors address the mobile, data center, automotive, and embedded systems markets. Arm also provides software development tools that help programmers optimize applications on its chips, including artificial intelligence (AI) workloads.

Due to its energy-efficient architecture, Arm hardware is found in 99% of smartphones and 67% of other mobile devices. Intel and AMD still dominate the personal computer and data center server markets, but Arm is gaining share. Apple has moved entirely to Arm chips in its MacBooks, and Alphabet, Amazon, and Microsoft have built data center processors on Arm technology.

Arm reported encouraging financial results in the third quarter of fiscal year 2025, which ended in December 2024, beating expectations on the top and bottom lines. Revenue increased 19% to $983 million, and non-GAAP (generally accepted accounting principles) net income increased 26% to $0.39 per diluted share.

Management noted strong growth in royalty revenue from its latest Armv9 architecture and strong demand for compute subsystems (CSS) that help clients build custom chips faster. "Increased chip complexity is driving the top hyperscalers to customize silicon on the latest Armv9 and CSS. We are gaining share in the data center with [Amazon Web Services] Graviton, Microsoft Cobalt, Google Axion, and Nvidia Grace Arm-based chips," CEO Reed Haas told analysts on the fourth-quarter earnings call.

Arm stock is expensive at its current valuation of 91 times adjusted earnings, especially when Wall Street expects adjusted earnings to grow at 32% annually through fiscal 2026, which ends in March 2026. But I think that estimate leaves room for upside. Hyperscalers are aggressively investing in custom silicon to support AI workloads, and Arm will benefit from the Stargate Project. Patient investors should consider buying a very small position here.

So, what did Nvidia sell? I suspect the company was simply taking some money off the table. Regardless, Arm is still its largest holding, accounting for 45% of its portfolio. So, I doubt Nvidia has lost confidence in Arm.

SoundHound AI: 110% implied upside

SoundHound provides voice artificial intelligence solutions. Its products address use cases in the automotive, restaurant, customer service, and consumer electronics markets. Its platform also lets businesses develop custom conversational applications, and its customers include well-known brands like Chipotle, Stellantis, and Qualcomm.

Investors should be aware that SoundHound competes against larger technology companies like Amazon and Microsoft. But SoundHound has been collecting voice AI data for more than 15 years and says its technology surpasses competing products in speed, accuracy, and complex language understanding. Analysts at Frost & Sullivan recently ranked SoundHound a conversational AI leader in healthcare.

SoundHound continued to grow quickly in the fourth quarter, but it also continued to lose money. Revenue increased 101% to $34 million, but non-GAAP gross margin contracted 25 percentage points, and its adjusted loss widened to $0.05 per diluted share. The company also reported cash from operations of negative $108 million, and it has only $200 million in cash and equivalents on its balance sheet.

Juniper Research expects voice AI spending to reach $160 billion by 2026. That puts SoundHound in front of a tremendous opportunity. But the stock currently trades at the absurdly expensive valuation of 49 times sales, a material premium to the three-year average of 22 times sales. That likely explains Nvidia's decision to sell in the fourth quarter. I would avoid chasing this stock at its current price, but it has a place on my watchlist.