When it comes to artificial intelligence (AI), there's Nvidia (NASDAQ: NVDA) , and there's everyone else. The chipmaker has become the poster child for AI as its graphics processing units (GPUs) have become the gold standard for AI systems . So, when Nvidia makes an investment in anything AI-related, investors sit up and take notice.

That's what happened earlier this year with SoundHound AI . In February, investors learned that Nvidia had taken a small position in the voice and audio recognition specialist, which sent its shares skyward, gaining as much as 93% in the week following the revelation.

Now, history is repeating itself. Last month, Nvidia revealed it had acquired a somewhat sizable stake in Serve Robotics (NASDAQ: SERV) , which sent the stock into the stratosphere. Let's take a look at what enticed Nvidia to invest in the company and if it makes sense for investors.

Serve'd up hot

Serve Robotics describes itself as a "leading autonomous sidewalk delivery company." The company went public without much fanfare on April 18, offering up 10 million shares of common stock at $4 per share. The stock initially slipped under the radar and interest was weak, as the stock ended its first day of trading down 22%.

The company is focusing on what management believes is a $450 billion market using robotics and drones for last-mile delivery. For example, the company estimates that the median distance of food deliveries in the U.S. is 2.5 miles. It further suggests that the average cost to cover that distance using its autonomous robots would be about $1, much cheaper than existing alternatives -- while cutting down on the greenhouse gas emissions caused by automobiles.

Serve first launched its fleet of sidewalk delivery robots in Los Angeles in 2020. By the end of the year, these robots had completed more than 10,000 deliveries for food delivery service Postmates -- now owned by Uber Technologies .

Uber has a commercial partnership agreement with Serve to deploy as many as 2,000 of its delivery robots by 2025, up from Serve's current fleet of roughly 100. The expansion will see at least 250 robots in Los Angeles by the first quarter of 2025, expanding into new geographic markets beginning in Q2.

Not just Nvidia

In a regulatory filing that dropped on July 18, Nvidia revealed that it owned more than 3.7 million shares of Serve Robotics stock, amounting to a 10% position in the company, with that stake that was valued at roughly $10 million (at the time). Word of Nvidia's investment stoked interest in the tiny company, driving its shares up 335% (as of market close on Thursday). However, several developments in recent weeks have compounded investor excitement, and it isn't just about Nvidia.

Just this week, Serve announced a partnership with Shake Shack to deliver its food orders through Uber Eats in Los Angeles. Scoring a well-known fast-casual chain like Shake Shack was a coup for Serve, elevating its profile in the food delivery space.

This announcement came on the heels of Serve Robotics' second-quarter financial results, which were better than expected. The company generated revenue of $470,000, which included $300,000 from auto parts supplier Magna to license its robotic technology. Delivery revenue of $170,000 surged 178% year over year and 80% sequentially. At the same time, gross margin for the segment improved 85% year over year and 64% quarter over quarter.

Helping drive its financial results was a strong operating performance. Serve averaged 385 daily supply hours during the quarter, up 106% year over year and 28% sequentially. The company also increased its daily active robots by 85% year over year and 23% sequentially.

Should investors follow Nvidia?

While Nvidia's stake in Serve Robotics is notable, it needs to be put in perspective. At the end of the second quarter, Serve represented less than 2% of Nvidia's AI-focused portfolio. For context, chipmaker Arm Holdings made up about 82%.

With a market cap of roughly $422 million, Serve Robotics barely rises to the level of small-cap and has yet to generate a profit. As such, the stock will be extremely volatile and far more risky than an investment in Nvidia. There's also the matter of valuation, as Serve's stock is currently selling for 259 times forward sales. For context, Nvidia is selling for 25 times forward sales, a bargain considering its triple-digit growth.

Investors who really want a piece of Serve Robotics shouldn't buy any more than a tiny stake befitting such a risky bet. Better yet, they can simply buy Nvidia, thereby owning Serve by proxy.

Before you buy stock in Serve Robotics, consider this: