(Bloomberg) — The latest sign of continued investor demand for all things artificial intelligence: a record high in drug discovery firm Recursion Pharmaceuticals Inc. After an investment from Nvidia Corp.
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A $50 million private investment from the AI-related chip maker sparked a boom in Recursion, which uses machine learning to discover new drugs. The stock more than doubled on the open market before ending Wednesday with a record gain of 78%.
The rally is a sign that the AI mania may finally spill over into the battered biotech sector that has suffered under the Federal Reserve’s regime of rate hikes. Before Wednesday’s recovery impulse was down 12% year-over-year, shares are now up 57%.
The new funds cement Recursion’s leading position as a leading AI-driven biotech company, according to Jill Blum, an analyst at Needham & Co. Note to customers.
Keybanc Capital Markets analyst Scott Schoenhouse described the agreement as “a meaningful validation step for AI in the overall drug/molecule development space.”
Read more: AI drug discovery is a $50 billion opportunity for Big Pharma
Gain peers who use algorithms to find new targets, too. Exscientia Plc and AbCellera Biologics Inc. up 12%, Relay Therapeutics Inc rose 7.1% while Schrodinger Inc. by 3.6%.
Baillie Gifford & Co. , a money manager known for early bets on stocks such as Tesla Inc. and Moderna Inc. , the largest owner of Recursion, according to data compiled by Bloomberg. Rival Cathie Wood’s Arc Investment Management also owns a stake.
Recursion has also gained interest among short sellers this year. Short interest as a percentage of the float, or the number of shares traders have borrowed to bet on, rose to nearly 19% from about 14% in January, according to data from S3 Partners.
– With assistance from Jamila Robinson and Carmen Renick.
(Updates posts, an earlier version corrected Keybanc’s spelling.)
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