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As the AI wave swells in 2023 and 2024, companies specializing in generative artificial intelligence are riding high. While Nvidia (NASDAQ:NVDA) garners much attention as a major player, SoundHound AI (NASDAQ:SOUN) has emerged as a compelling contender. SOUN stock earns a commendable “B” grade in our book.
Nvidia’s recent stellar fourth-quarter fiscal 2024 financial results have underscored its dominance in the AI realm. Yet, the spotlight isn’t on Nvidia alone when it comes to revenue growth in the AI sector. For a comprehensive exposure to the AI market, investors may consider investing in both Nvidia and SoundHound AI.
A Heavyweight Endorsement
Being crowned a kingmaker in the AI arena makes Nvidia’s $3.7 billion investment in SoundHound AI a significant vote of confidence. This sizeable investment underscores Nvidia’s bullish outlook on the specialized market that SoundHound AI caters to.
What drives Nvidia to pump such vast resources into SoundHound AI? Perhaps Nvidia’s leadership foresees robust expansion in the niche market of SoundHound AI. In a recent interview, SoundHound AI CEO Keyvan Mohajer shared that while Nvidia lays the groundwork for AI infrastructure, SoundHound effectively leverages it. This symbiotic relationship points to a promising future for both companies in riding the wave of generative AI.
SoundHound AI has staked its claim in AI-powered voice software, offering solutions that businesses can utilize for customer service. Mohajer envisions a substantial niche market opportunity worth $100 billion, as SoundHound AI’s products enable voice-AI functionalities in televisions, other electronic devices, and even automobiles.
Resounding Revenue Growth
Investors seeking substantiated data alongside market opportunities will find a compelling case for SOUN stock in SoundHound AI’s financial performance. Parallel to Nvidia, SoundHound AI has demonstrated a positive revenue trajectory. Specifically, in Q4 2023, SoundHound AI witnessed an 80% year-over-year revenue surge to $17.1 million.
Furthermore, SoundHound AI’s gross margin increased by 6 percentage points year over year to a robust 77% in the same quarter. The impressive performance extended to the full year of 2023, with a 6 percentage point year-over-year rise in gross margin to 75%.
While SOUN stock doesn’t yet earn an “A” grade, there’s room for SoundHound AI to enhance its financial standing. A profitable quarter and year would be welcomed progress. Notably, SoundHound AI managed to reduce its full-year 2023 net earnings loss to 40 cents per share, a significant improvement from the 74 cents per share loss in 2022.
A Promising AI Portfolio Addition
SoundHound AI’s stock has surged this year, indicating potential for continued growth in 2024 as businesses uncover the myriad applications for generative AI voice software.
Investors need not choose between SoundHound AI and Nvidia; it’s feasible to hold positions in both NVDA and SOUN stocks, despite Nvidia’s established dominance. Moving ahead, it merits attention to track SoundHound AI’s journey as a prominent Nvidia-backed rising star in the AI landscape.
On the date of publication, Louis Navellier held a long position in NVDA. Louis Navellier did not hold any other positions in the securities referenced in this article.
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The views and opinions expressed here reflect those of the author and may not align with those of Nasdaq, Inc.
