Why Serve Robotics Stock Has Been Soaring Over the Last Month

One of the big winners in the stock market last month was Serve Robotics (SERV -1.48%). Shares have soared by 30% just since Monday, resulting in a gain of about 800% since July 1, according to data provided by S&P Global Market Intelligence.

That’s because on July 18, tech giant Nvidia disclosed its 10% ownership in the small, early-stage robotics company. In addition to the investment from Nvidia, investors are also likely familiar with the company’s roots. The maker of advanced delivery robots powered by artificial intelligence (AI) was spun off from Uber Technologies in 2021. The now-independent company counts Uber Eats as well as convenience store chain 7-Eleven as partners.

Following Nvidia’s investment lead

Nvidia has led the way developing high-powered chips needed for AI computing power. And the company has recently been touting its leadership in using advanced computing to develop humanoid robots and promote robot manufacturing.

On Monday, Nvidia CEO Jensen Huang highlighted his company’s work in the sector, stating, “The next wave of AI is robotics and one of the most exciting developments is humanoid robots, [and] we’re advancing the entire NVIDIA robotics stack.”

So it makes sense that the company would want a stake in Serve. Serve management thinks the total addressable market for robotic and drone delivery could reach about $450 billion by 2030.

But make no mistake: The estimated market is just a prediction, and there is still much investors need to learn about Serve Robotics. It just went public through an initial public offering (IPO) in April. The company reported delivery and branding revenue of slightly less than $1 million in the first quarter, representing sequential growth of 124%. It made another $850,000 in software service revenue.

Yet Nvidia clearly seems to believe it’s a speculation worthy of investment. Only risk-tolerant investors should follow that lead right now, though. The stock could indeed be a big winner over the long run. But other than Nvidia’s affirmation, there isn’t enough data yet to have confidence the risk-reward balance is appropriate.

Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Uber Technologies. The Motley Fool has a disclosure policy.