Nvidia invests $50 million in biotech company Recursion for A.I. drug discovery

Chipmaker Nvidia will invest $50 million in Recursion Pharmaceuticals to speed up the development of the biotech firm's artificial intelligence models for drug discovery, the companies said Wednesday. 

Recursion's stock soared 80% following the announcement. Shares of Nvidia, which have helped fuel stock market gains this year amid hopes about its AI computing chips, rose more than 2%. 

Recursion uses AI-powered models to identify and design new therapies, and offers those models to other drugmakers, including Roche and Bayer.

Salt Lake City, Utah-based Recursion will use its biological and chemical datasets exceeding 23,000 terabytes to train its AI models on Nvidia's cloud platform. Those datasets grow by "hundreds of terabytes every week," Recursion CEO Chris Gibson said on CNBC's "Closing Bell Overtime."

AI models usually require vast amounts of data, typically measured in terabytes, to train them.

Nvidia can then potentially license those AI models on BioNeMo, the company's cloud service for generative AI in drug discovery that it rolled out earlier this year. 

Recursion expects to use BioNeMo to support its internal drug pipeline and those of its current and future partners. Gibson said Recursion is conducting human trials for five of its drugs, some of which will have data readouts next year.

That includes a drug that aims to treat a neurovascular disease caused by the brain's malformation of small blood vessels, and a treatment for a certain type of ovarian cancer.

"I think we're focused on the long term and at Recursion, we believe that by leveraging technology, automation, the newest tools in biology and chemistry — we have an opportunity to speed up the pace and speed of drug discovery in the coming years," Gibson told CNBC.

"We've had a lot of positive proof points in the last couple of years and I think we're well positioned to hopefully show a lot of positive catalysts in the coming years as well," he continued.

Nvidia's investment is the latest example of the AI frenzy making its way into the pharmaceutical industry. Drugmakers are increasingly recognizing AI's potential to get life-saving treatments to people faster. 

Moderna said in April that it will harness the power of AI to advance the company's messenger RNA technology, which is used in Covid vaccines. A month later, Google Cloud launched two new AI-powered tools that aim to help biotech and pharmaceutical companies accelerate drug discovery.

Nvidia, which produces chips used to power AI, is seen as a big winner in the AI boom.

The company reached a trillion-dollar market value for the first time in June, part of the more than 200% increase in the stock's price since the beginning of this year on the back of heavy demand for AI.

The investment in Recursion only deepens Nvidia's bet in the popular technology. 

The announcement also comes as Recursion strengthens its focus on AI. The company in May acquired two companies in the AI-driven drug discovery space for $87.5 million. 

Other AI-driven drugmakers also traded higher Wednesday following the announcement. Exscientia soared as much as 12%, while AbCellera Biologics jumped more than 13%.

— CNBC's Benjamin Taubman contributed to this report.