Nvidia (NVDA -0.06%) is the world's largest semiconductor company. That value has reached a whopping $1.8 trillion, with more than $1 trillion of that generated in the past 12 months alone by next-generation data center chips designed to handle artificial intelligence (AI) workloads. .
Now, Nvidia is spreading some of its newfound wealth into other areas of the AI ​​industry. The company filed a Form 13F with the Securities and Exchange Commission (SEC) last week, revealing that it had made numerous investments in other AI companies.
Soundhound AI (Thorn 1.60%) was one of them, and the day NVIDIA's investment was revealed, the company's stock price soared 67%. As of this writing, the company is worth just under $1 billion, but its voice-based AI technology is incredibly innovative and has the potential to create even more value. Here's why investors may want to follow Nvidia's lead and buy SoundHound AI stock.
Image source: Getty Images.
SoundHound is the leader in conversational AI
You may be familiar with ChatGPT, a generative AI chatbot developed by OpenAI. You can answer complex questions and turn text-based prompts into blog posts, images, videos, and even computer code. SoundHound AI, on the other hand, develops conversational AI designed to recognize voice-based prompts and respond to them as well.
SoundHound says its technology can process audio similar to the human brain. This has great potential for consumer applications, and some of the world's largest companies are already adopting it. Restaurant chains use SoundHound to answer phones, automate drive-thru orders, and assist employees with daily tasks. Jersey Mike's, White Castle, Crispy cream Those are just a few of the big restaurants using this technology.
SoundHound also partners with restaurant technology providers, including: blocksquare, toast, and Oro. The company integrated conversational AI into its POS and ordering systems, allowing customers to seamlessly make purchases using voice. These integrations will allow SoundHound to rapidly expand to tens of thousands of new locations.
Automotive giants are also using SoundHound to create highly sophisticated in-car voice assistants. They can do everything from helping drivers navigate vehicle features to answering questions about the weather, sports scores, and even local restaurant availability. hyundai, kiaand Stellantis (Chrysler, Jeep, Dodge) are just a few of the automakers currently using SoundHound AI.
2023 was SoundHound's biggest year ever
SoundHound is expected to report its fourth quarter and full-year 2023 financial results in the coming weeks. Wall Street analysts expect total revenue this year to be $46.5 million, which would be a 49% growth compared to 2022.
Although SoundHound seems to have relatively modest revenue for a billion-dollar company, the company has amassed a massive backlog of $341.7 million as of September 30th, and is currently We are working towards this goal. These orders are expected to turn into revenue over time.
Additionally, SoundHound generated revenue of just $6.7 million in the first quarter of 2023, but management expects revenue of $16 million to $20 million in the fourth quarter. The company is expanding rapidly.
SoundHound AI isn't the only bet Nvidia has made recently
According to Nvidia's Q4 2023 13F filing, it purchased 1,730,883 shares of SoundHound AI. The price Nvidia paid was not disclosed, but the position is worth $6.5 million at SoundHound's current stock price of $3.76.
SoundHound wasn't the only stock Nvidia bought in the fourth quarter.A total of 1,960,784 shares to semiconductor designers arm holdings, worth more than $260 million at current prices.Nvidia also purchased shares. recursion medicineworth $95 million at today's prices.
nano-x imaging and Tasimple Holdings These are the other two stocks that Nvidia bought.
Each of these companies leverages AI and autonomous technology in some way.
Should you follow Nvidia into SoundHound AI stock?
Nvidia's $6.5 million position doesn't say much about SoundHound's future prospects. But given the fact that Nvidia has identified SoundHound in the field of expanding AI opportunities, one wonders what the chip giant is thinking.
Financially, SoundHound was on the verge of running out of cash until exactly a year ago, when it secured a $125 million financing facility from Atlas Credit Partners. SoundHound continues to lose money, but this cash injection should be enough to get the company through (at least) the next 12 months, assuming its losses don't widen any further.
It's true that SoundHound stock is a relatively risky trade, so it's no wonder it's incredibly volatile. With a 52-week low of $1.49 and a 52-week high of $5.11, the spread is quite wide.
Generative AI is a significant opportunity, and SoundHound already has an impressive customer list. Additionally, the backlog is expected to drive significant revenue growth for at least the next few years. It may be worth following Nvidia's lead by taking a small position in SoundHound AI stock, but investors should be prepared for volatility.
