SoundHound AI: A Promising Yet Volatile Player in the Voice AI Market

Meet the Supercharged Growth Stock That Could Make You a Millionaire | The Motley Fool

Every now and then, the right company is in the right place at the right time with the right product. If you're like most investors, you're not starting out with a ton of money. If you're going to achieve the dream of becoming a millionaire, then you're going to need to do it just a little at a time, using a bit of your income that isn't consumed by life's ordinary expenses. You also probably know that investing in stocks is the only way to meaningfully and reliably outpace the impact of inflation; the S&P 500's average annual return is in the ballpark of 10%. What if, however, you could also supercharge your portfolio with a growth stock that has the potential to beat the broad market for a long while? These names obviously bring more risk to the table with their greater potential for reward. But sometimes, that additional risk is worth it. An artificial intelligence (AI) technology company called SoundHound AI (SOUN 17.48%) is one such stock, made even more attractive by the 60% pullback from its December peak. Never heard of SoundHound? It wouldn't be surprising if you hadn't. It's neither as big nor as high-profile as AI tech titans like Nvidia or Microsoft. SoundHound's market capitalization is a much more modest $3.8 billion right now. It just doesn't turn many heads. There's a good chance, however, that you've used its technology without even realizing it. SoundHound's top skill is turning the spoken word into automated and actionable digital information. It simplifies and speeds up (and improves) fast food drive-thru ordering, allows automobiles to accept drivers' voice-activated commands, and can turn a house into a true smart home, operated by the resident's spoken instructions. Honda, fast food chain White Castle, and streaming music platform Pandora are just some of the names currently utilizing SoundHound's technology. More are joining the fold on a regular basis, too. It's admittedly not exactly a brand-new idea. Speech-recognition telephony has been around and relatively common since the '90s. But it's been clunky at best, and downright useless at its worst. It required the advent of large language model-based artificial intelligence for the idea to live up to the initial dream. But make no mistake -- it is living up to the dream now. Market research outfit Straits Research believes the global voice and speech recognition technology market is poised to grow at an average annual pace of 17% through 2033. For its part, we learned late Thursday that SoundHound's top line grew an incredible 85% to $84.7 million in 2024, en route to what the company expects to roughly be twice that amount this year. The growth pace should slow down from there, but only because that's when SoundHound's capacity to deliver will finally catch up with demand. Given the strength of its technology, this company looks positioned to capture more than its fair share of the industry's growth. This backdrop begs the question: If SoundHound's story is so bullish, why are its shares down on the order of 60% from their recent record high reached in December? To fully understand this sell-off, you actually need to go back to October of last year, before this stock began a meteoric run-up. That's when investors were first discovering this mostly unknown gem, and quickly falling in love with the premise. SoundHound also became something of a meme stock around that time, fanning the bullish flames. As is so often the case, of course, the overextended red-hot rally imploded. Then just last week, Nvidia disclosed that it had sold its own position in SoundHound's stock, further rattling the company's already-nervous shareholders. Now, the sell-off seems to have taken on a life of its own, perhaps further fueled by fears that Thursday evening's release of its fourth-quarter numbers would prove problematic. (Spoiler alert: They didn't.) Here's the thing. Nothing about this rise and fall is particularly unusual. SoundHound is hardly the world's first pre-profit tech stock to soar on hype and FOMO -- the fear of missing out -- and then plunge when reality sets in. The good news is, such a sweeping swing usually only has to happen once to a story stock like this one. That is to say, although SoundHound shares will likely remain more volatile than the typical ticker going forward, it's unlikely we'll see investors lose perspective with this company again, which is what allowed the stock to rise and fall as it has over the course of just the past few months. From here, shares should start being priced with at least a little more sensical acknowledgement of the company's current and projected results. It would also be naive to believe Nvidia wasn't at least a little bit incentivized to lock in big profits on its SoundHound trade. But for what it's worth, the analyst community has remained steadfast in its bullish stance despite shares' recent bearishness. Most of them consider this stock a buy, while none rate it lower than a hold. They're also maintaining a consensus price target of $14.06, which is more than 50% above the stock's present price. Sure, the stock's big jump following Thursday evening's release of its fourth quarter results presents something of a conundrum. Any investor would rather pay a lower price for a stock, but this particular ticker may never revisit its pre-report price. Just don't major in the minors. That is to say, for investors on the hunt for a high-powered long-term holding, it won't really matter if you bought in as low as you possibly could or perhaps paid a bit of a premium for it. The only thing Thursday's pre-close weakness followed by the stock's post-close surge proves is that SoundHound's shares are volatile. But, we already knew that was the case. Bottom line? If you're willing to take on a bit more risk to own a stock with the potential for above-average gains, consider a stake in SoundHound AI.

Could Buying SoundHound AI Stock Set You Up for Life? | The Motley Fool

Yet SoundHound remains a small company pursuing a potentially massive niche, so if things go well, its stock could deliver extraordinary returns. With that in mind, should investors view this year's dip as a buying opportunity or a sign to stay far away from the stock? SoundHound's share price received a massive boost in early 2024 after a 13F filing revealed that AI hardware giant Nvidia had taken a 1.7 million share stake in it. The market took this as a sign that Nvidia was optimistic about SoundHound, and might have been eying a future collaboration or an acquisition. The companies worked together on SoundHound ChatAI, an in-car voice assistant designed to offer generative AI capabilities without an internet connection. But other than that, collaborations between the two companies seemed limited. Then came that latest 13F filing, showing that Nvidia had exited its position in SoundHound, as well as its positions in several other small AI companies including Nano-X Imaging and Serve Robotics. Naturally, some investors will fear that the move indicates that Nvidia knows something about SoundHound that the rest of us don't. But this fear is unfounded. For starters, Nvidia's position was less than 1% of SoundHound's shares outstanding. As such a relatively small shareholder, it's unlikely to have had access to information that wasn't already public. Furthermore, the position was exited so quickly that SoundHound's core thesis didn't have time to play out. While it is impossible to know precisely why Nvidia bought and sold the shares, the investment may have just been a way for the chipmaker to deploy a bit of its excess cash as it continues to earn enormous profits. The main reasons for retail investors to bet on SoundHound now are the potential synergies between voice recognition technology and the large language models (LLMs) that underpin platforms like ChatGPT. These uses are the AI industry's obvious low-hanging fruit. And SoundHound has already secured numerous partnerships with automakers to support their in-car voice assistants and restaurants piloting its software in drive-thrus. The total addressable market is likely large because, if this software is good enough, it could replace some employees, providing restaurants with instant cost savings on labor. SoundHound's revenue surged by 89% year over year to $25 million in the third quarter as it attracted more clients across a wide range of industries. It also significantly improved its customer diversification, with only 12% of revenue coming from its largest customer compared to 72% in the prior-year period. But while SoundHound's growth was excellent, it wasn't entirely organic. It recently undertook a series of acquisitions, including the purchase of food ordering marketplace Allset in June. SoundHound's bottom line is also concerning. Its operating losses more than doubled to $33.8 million in Q3, which suggests that the company has no clear path to profitability for the time being. SoundHound has an early-mover advantage in its pursuit of a potentially massive opportunity. And Nvidia's recent divestiture might not be as bad a sign as the market fears. That said, the recent dip in the share price is not a buying opportunity. SoundHound has been relying on an acquisition-dependent growth strategy that may obfuscate its organic growth potential. Furthermore, its losses continue to expand. Even investors who feel strongly about the company's AI opportunity should wait for more clarity about its ability to exploit it profitably before considering opening a position in the stock.

Nvidia Dumps SoundHound AI Stock: Should You Do the Same? | The Motley Fool

When SoundHound AI (SOUN -3.76%) first soared in popularity last year, it was because chipmaker Nvidia revealed that it owned more than 1.7 million shares of the up-and-coming tech company. Many investors followed suit, buying shares of SoundHound in the hopes that it would be the next big tech stock to benefit from the artificial intelligence (AI) boom. In February, however, Nvidia's latest filings showed that it no longer held a position in SoundHound. Many other investors have also been selling their stakes in the voice AI company. The stock now trades for less than $10 and since the start of the year, it lost more than half of its value. Should you also get out of this AI stock, or could this sell-off be a great buying opportunity? SoundHound AI has a lot of potential, as its voice AI platform can help improve efficiency at drive-thru restaurants and be utilized in vehicles. But the problem is that the business isn't profitable. SoundHound AI is generating strong revenue growth, that has come recently as a result of the acquisitions of AI companies Amelia and SYNQ3.Amelia was a particularly key acquisition, as it enabled SoundHound to enter more verticals and diversify its customer base. A troubling trend for SoundHound is that its operating losses have often been higher than its revenue. While there will be some growing pains as the business scales, this pattern isn't sustainable, and that could lead to further declines for the stock. The company is burning through cash. In January, it filed documents indicating that it may raise up to $500 million through a mixed shelf offering. If SoundHound's financials don't improve drastically, the need for more capital raises may be inevitable, leading to further dilution for existing shareholders. At a time when there are a growing number of competitors in AI, SoundHound may need to spend aggressively to keep up, and that may only intensify its needs to raise more cash in the future. Even though SoundHound's valuation has been plummeting of late, it still isn't a cheap stock to own. It's trading at a price-to-sales (P/S) multiple of 43, and its price-to-book ratio is over 12. If you're buying the stock today, you're paying a hefty premium for what still looks to be an unproven business. While SoundHound's recent acquisitions may help grow the top line and potentially bring down the stock's P/S multiple, without a compelling reason to believe that the business has a path to profitability, its $3.5 billion market cap may still prove to be too expensive for many investors. Retail investors have been hoping that SoundHound could be the next big AI stock, but that doesn't appear to the case, at least not now. While the stock is still showing gains of 42% in the last year, investors look to be having second thoughts, especially now that Nvidia no longer has a significant stake in the business. That volatility is a risk investors take when following what other investors and companies do, rather than investing in a business based on its own fundamentals and merits. While I wouldn't rule out a rally for SoundHound in the future, it may be unlikely to happen if the company's financials don't improve significantly. This was a highly risky stock when it first skyrocketed last year, and not much has changed since then. Unless you're a contrarian investor who has a high risk tolerance, you may be better off passing on SoundHound and looking at safer growth stocks to buy instead.

Nvidia Sold All of Its SoundHound AI Stock. Should Investors Follow This AI Leader?

One of the original catalysts for why SoundHound AI (SOUN -5.62%) went on a massive run was that it was revealed that Nvidia invested in it. This automatically gave SoundHound credibility as to its position in the artificial intelligence (AI) arms race. However, that is no longer the case. In its latest 13F filing (which reveals what investments a company holds if it has more than $100 million invested across its portfolio), the public became aware that Nvidia sold all of its SoundHound AI stake and trimmed some others. This caused SoundHound's stock to sell off, as many investors assume that Nvidia knows something we don't. So, is this true? Or could this be a massive buying opportunity? SoundHound wasn't a huge part of Nvidia's investment portfolio One thing to remember is how large Nvidia's stake in SoundHound was. Nvidia owned 1.7 million shares, valued at $33.7 million on Dec. 31, 2024 (the last day Nvidia could have sold its shares for this 13F filing). While that may seem like a massive chunk of money to you and me, it's pocket change for Nvidia. Last quarter, Nvidia produced $16.8 billion in free cash flow and had $38.5 billion in cash and short-term investments on its balance sheet. So this decision to sell SoundHound stock may not have been for business purposes; it could have just been to clean out some shares it was holding from companies it did deals with. I think this is more noise than signal for SoundHound AI investors, but with the audio stock down 45% in 2025 alone, it's worth considering whether it's worth buying on sale. SoundHound is still primed for massive growth in 2025 SoundHound AI makes audio recognition software for AI models, which has massive potential. The company's results back this up, as its revenue rose 89% in Q3. Observers will get an update on Q4 results and official 2025 guidance on Feb. 27, but management has already clued investors in on how strong 2025 will be. During its Q3 conference call, SoundHound's management team gave preliminary 2025 guidance that stated its revenue should be between $155 million and $175 million. Considering that 2024's total is projected to be between $82 million and $85 million, this indicates that revenue will double in 2025. Investors should be excited about that, but it comes at a steep price. Even after its massive sell-off, SoundHound's stock is far from cheap. Because the company doesn't have any profits, potential investors need to value SoundHound using its sales. SoundHound currently trades at 50 times sales, which is far cheaper than where it was trading, but still more expensive than where it spent most of 2024. SOUN PS Ratio data by YCharts Indeed, 50 times sales is a very expensive stock price, but it's more justifiable considering SoundHound should double its revenue next year. However, I'm not sure if this is a buying point. SoundHound still has a premium valuation, and the selling pressure on the stock is incredibly high as investors consider moving on from one of last year's best performers. Unless SoundHound's Q4 results greatly exceed expectations, I wouldn't be surprised to see the stock sell off after Q4 earnings. After that report, I may consider SoundHound AI again, as the hype will have been sold off from the stock, and what remains is an actual business. Despite the huge sell-off, investors must be patient with SoundHound, as it could have further to go if its Q4 results aren't perfect. If you're sitting on huge gains from the stock, I also think it may be prudent to take a bit of your gains, as you're likely sitting on a significant profit if you've owned the stock for at least a year. There are still plenty of questions surrounding SoundHound AI, but investors need to be a bit more patient before diving in.

Is Soundhound AI Stock a Buy After Its Nvidia-Fueled Sell-off? | The Motley Fool

Soundhound AI's (SOUN -5.50%) shares skyrocketed as much as 883% last year. However, the artificial intelligence (AI) stock is now down roughly 55% from its peak in late December. You can blame part of this decline on the Federal Reserve. Investors were spooked when the Fed signaled there could be fewer interest rate cuts than expected in 2025. This caused many high-flying growth stocks, including Soundhound AI, to fall. However, another culprit was behind Soundhound AI's plunge of nearly 30% in recent days -- Nvidia (NVDA -4.05%). Is the beaten-down AI stock a buy after its Nvidia-fueled sell-off? One of the best things that can happen for a small company is to score a major investment from a big company. Many investors see that as a sign they can be more confident in the small company. Nvidia first invested in Soundhound AI in 2017 as part of a $75 million financing round. In February 2024, the huge GPU maker revealed in a regulatory filing how big its stake was in Soundhound. This disclosure provided a big catalyst for the small AI stock. But the same hand that gives can also take away. Last week, Nvidia submitted another regulatory filing that showed it had completely exited its stake in Soundhound AI. Just as investors viewed Nvidia's initial position in Soundhound as a vote of confidence, they saw the sale of all its shares as a vote of no confidence. That could be reading between the lines too much, of course. Nvidia might have several reasons for selling all of its Soundhound AI shares that don't reflect less optimism about the company. However, perceptions matter -- and Nvidia's sale of Soundhound was seen in a negative light. But there's a good case to be made that the investing premise for Soundhound AI is the same as it was before Nvidia's regulatory disclosure. The company's prospects still appear to be promising. Soundhound AI's sales are booming. In the third quarter of 2024, the company reported its highest revenue ever with sales jumping 89% year over year. Revenue was also more diversified than in the past, with 12% coming from Soundhound's largest customer compared to 72% in the prior year period. This diversification also improved across industries. In Q3 2023, over 90% of Soundhound's revenue came from automotive customers. A year later, customers in the automotive, restaurant, financial services, healthcare, and insurance sectors each contributed between 5% and 25% of total revenue. There's still a massive opportunity for voice AI technology with an estimated total addressable market of at least $140 billion. Even with Soundhound's success so far with automotive and restaurant customers, it's only scratching the surface of what could be done with voice AI in these areas. However, the negative aspects of the investing premise for Soundhound AI also remain intact. The company still isn't profitable. It continues to face significant competition including several rivals with much deeper pockets. Soundhound's valuation is also steep even after the recent decline with shares trading at nearly 50 times sales. So is Soundhound AI stock a buy after its Nvidia-fueled sell-off? My answer is the same as it was before the news broke about Nvidia's sale of its Soundhound shares: Maybe. I think risk-averse investors should definitely avoid Soundhound AI. The stock is likely to be highly volatile in the coming months (just as it has been in the past). It's possible that big competitors could ultimately prevail over Soundhound in the marketplace. On the other hand, Soundhound AI is doing a lot of the right things to grow its business. The company's opportunities truly are great if it can execute well and out-innovate the competition. Aggressive investors who like high-risk, potentially high-reward stocks could find Soundhound AI an intriguing pick -- and one that's available at a cheaper price now thanks to Nvidia.

Is SoundHound AI Stock a Buy Now? | The Motley Fool

SoundHound AI (SOUN 6.74%) is having a terrible 2025 so far as shares of the voice artificial intelligence (AI) solutions provider have dropped more than 57% as of February 25, and the stock received its latest jolt after it emerged that semiconductor bellwether Nvidia has sold its stake in the company. It is worth noting that SoundHound sprung into the limelight in February 2024 after it emerged that Nvidia had a small stake in the company worth $3.7 million. Since then, shares of SoundHound have witnessed a roller-coaster ride on the market, rising remarkably in the fourth quarter of 2024. So, the news that Nvidia has sold its SoundHound stake for a nice profit led many investors to press the panic button. However, is the latest drop an opportunity to buy this fast-growing AI company? Let's find out. SoundHound's market cap currently stands at just over $4 billion. So, Nvidia's stake in the company wasn't so big that it warranted a sharp sell-off. Of course, some may wonder if Nvidia's exit suggests that it wasn't expecting more upside from SoundHound, especially considering its valuation. That may be true to an extent as SoundHound has been trading at expensive levels in the past year thanks to the big jump in its stock price. What's worth noting is that SoundHound is still trading at an expensive 47 times sales following its sharp pullback in 2025. However, that's lower than the stock's price-to-sales ratio of 90 at the end of 2024. So, investors are getting their hands on this growth stock at a relatively cheaper valuation right now. More importantly, the pace at which SoundHound has been growing could help it justify its expensive valuation. Does this mean growth-oriented investors looking to add an AI stock to their portfolios should consider buying SoundHound right now? SoundHound will release its fourth-quarter 2024 results on Feb. 27. The company's guidance for 2025 indicates that its top line is on track to increase 82% from the previous year. That would be a sharp improvement over the 47% revenue growth the company clocked in 2023. Even better, the midpoint of SoundHound's 2025 revenue guidance stands at $165 million, which would be nearly double its 2024 revenue. Analysts are expecting a slowdown in the company's growth rate in 2026, as shown in the chart below. However, SoundHound may very well outpace Wall Street's growth expectations next year. That's because the company points out that it has a combined order backlog of more than $1 billion after taking into account its recent acquisition of enterprise AI software provider Amelia. That's much higher than the combined revenue that the company is on track to achieve in 2024 and 2025, and also exceeds the revenue that analysts are expecting it to report next year. Moreover, SoundHound AI's voice AI solutions are gaining healthy traction in the market. It has built a solid customer base in the automotive and restaurant verticals. Also, the company is looking to push the envelope by bringing more customers on board and diversifying into new areas following its Amelia acquisition. A closer look at recent press releases suggests that the adoption of SoundHound's offerings remains healthy, with the likes of Lucid Motors and Kia integrating its solutions in their vehicles. Moreover, SoundHound is operating in a multibillion-dollar voice AI market that's expected to jump nearly 20x in size between 2024 and 2034, generating close to $48 billion in annual revenue after a decade. So, investors who are willing to pay a premium for the outstanding growth that SoundHound is delivering could be rewarded with robust upside in the long run, making the recent pullback an opportunity to buy it before a potentially solid earnings report sends it higher. However, they need to keep in mind that SoundHound stock has been prone to volatility in the past year, and its expensive valuation leaves open the possibility of big swings in the stock price.

Could Buying SoundHound AI After the Stock's 55% Decline Make You a Millionaire? | The Motley Fool

Investors are trying to gauge whether the stock's sudden decline is a buying opportunity or a sign of what's to come. There's no free lunch in the stock market. Life-changing investments almost always involve volatility. That's simply the cost of admission when investing in high-risk, high-reward stocks. SoundHound AI (SOUN 7.53%) has gained 150% over the past year, yet it is down approximately 55% from its all-time high in December. Unfortunately, not every stock goes up forever. The tricky part of finding millionaire-making stocks is determining which companies have the fundamental business strength to rebound and make new highs. Investors today find themselves in this situation with SoundHound AI. The company tells a promising story, and now, it's about turning that into sustained revenue growth and profits. Can buying the stock on this pullback make you a millionaire? Here is what you need to know. SoundHound AI is a growing but speculative company that develops voice and sound artificial intelligence (AI) for vehicles, drive-throughs, and other applications. In late December, the stock soared to a blistering valuation, peaking at a price-to-sales ratio (P/S) of 110, making it among the most expensive stocks on Wall Street. Such high valuations are challenging to maintain because they create impossibly high expectations for the company. Investors cooled on the stock, apparently underwhelmed after the company's presentation at CES 2025 in early January. A showcase doesn't necessarily mean much in the grand scheme of things, but it doesn't take much to cause a sell-off when the valuation stretches that far. The takeaway here for investors is that SoundHound AI's decline is mainly about a stock that got way too ahead of its business fundamentals. There's a solid argument that no stock, no matter how great the business is, should trade over 100 times its revenue. That's unsustainable and doesn't reflect the company's traits or quality. There is a lot to like about the business. For starters, it's growing. The company is undergoing a significant growth spurt after acquiring Amelia in late 2024 to expand into new applications. The acquisition brings an existing customer base that will help lift revenue from roughly $85 million in 2024 to a guided range of $155 million to $175 million in 2025. Management estimates that SoundHound AI's addressable market is $140 billion, indicating a significant growth opportunity. However, the company must continue penetrating new opportunities such as call centers, retail, electronic devices, and the like. Its long-term potential may ultimately depend on execution as it competes with others, including some in the "Magnificent Seven" that also offer audio-based AI technology. The gauge for success and investment potential will be in financials, where SoundHound AI must show it can turn profitable while maintaining its growth. The company's daily operations have burned just over $75 million in cash through nine months of 2024, so the business isn't close to generating positive cash flow, let alone net income. The stock could struggle to maintain a high valuation until investors see a clear path to profits. If you believe in a company, buying its stock at a lower price is better because future growth is less likely to be priced in. SoundHound AI's P/S has fallen to about 24 (using 2025 revenue guidance). That's far better than where it was a few months ago, but it's still a stretch to call it cheap at these prices. For example, SentinelOne, a growing but unprofitable cybersecurity company, trades at around 7 times its estimated revenue for this year. So, if SoundHound AI traded on par with SentinelOne, it would have to fall roughly 70% from here. Who knows whether that will happen, but such a wide range of valuations for similar stocks (growing but unprofitable) underlines the potential risks in buying shares here. A potential millionaire maker will generally be riskier than most stocks already. Still, investors should do their best to find stocks with both upside potential and valuations that leave room for the massive investment returns achieved by reaching that potential. SoundHound AI's high valuation offers too little upside for the risks involved. Therefore, it's probably not the potential millionaire maker you're seeking.

SoundHound AI Plummeted Today -- Is Now the Time to Buy the Stock? | The Motley Fool

AI stocks with growth-dependent valuations got hit hard in Monday's trading as investors moved to reduce their exposure in case Nvidia reports disappointing fourth-quarter results on Wednesday. SoundHound AI's valuation was also pushed after reports suggesting Microsoft won't be moving ahead with some of its data center expansion plans raised concerns about the broader growth outlook for AI plays. SoundHound AI has been highly volatile over the last year. While the company's share price is still up roughly 141% over the last 12 months, the stock has fallen roughly 52.5% across 2025's trading. Given the market-shaping potential of Nvidia's upcoming Q4 report on Wednesday and the arrival of SoundHound's own Q4 report the next day, shares are seemingly poised for more big moves this week. With a market capitalization of roughly $3.7 billion, SoundHound AI is now trading at approximately 22.4 times this year's expected sales. That's still a heavily growth-dependent valuation that opens the door for big downside risk, but recent sell-offs for the stock have pushed the company's shares down to levels that look more reasonable in the context of the company's growth trajectory. With its last quarterly report, SoundHound raised its full-year sales target for 2024 to between $82 million and $85 million. At the midpoint of the guidance range, that would mean year-over-year sales growth of approximately 82%. The company also said it anticipates revenue for 2025 will be between $155 million and $175 million, which suggests revenue could more than double this year. Even on the heels of big sell-offs, SoundHound AI stock probably isn't a good portfolio fit for risk-averse investors. But for investors with high risk tolerance and a positive outlook on the business's expansion potential, the recent valuation pullback could present a worthwhile entry point.

Does Nvidia Know Something Wall Street Doesn't? It Sold 2 AI Stocks Analysts Say Can Soar 65% and 110%. | The Motley Fool

Companies that own more than $100 million in publicly traded stock must disclose that information in Form 13F. Those reports must be filed no later than 45 days after the end of each quarter, and they can provide clues as to how large institutions are navigating the stock market. Arm designs and licenses central processing units (CPUs) and subsystems to clients that develop custom chips. Its processors address the mobile, data center, automotive, and embedded systems markets. Arm also provides software development tools that help programmers optimize applications on its chips, including artificial intelligence (AI) workloads. Due to its energy-efficient architecture, Arm hardware is found in 99% of smartphones and 67% of other mobile devices. Intel and AMD still dominate the personal computer and data center server markets, but Arm is gaining share. Apple has moved entirely to Arm chips in its MacBooks, and Alphabet, Amazon, and Microsoft have built data center processors on Arm technology. Arm reported encouraging financial results in the third quarter of fiscal year 2025, which ended in December 2024, beating expectations on the top and bottom lines. Revenue increased 19% to $983 million, and non-GAAP (generally accepted accounting principles) net income increased 26% to $0.39 per diluted share. Management noted strong growth in royalty revenue from its latest Armv9 architecture and strong demand for compute subsystems (CSS) that help clients build custom chips faster. "Increased chip complexity is driving the top hyperscalers to customize silicon on the latest Armv9 and CSS. We are gaining share in the data center with [Amazon Web Services] Graviton, Microsoft Cobalt, Google Axion, and Nvidia Grace Arm-based chips," CEO Reed Haas told analysts on the fourth-quarter earnings call. Arm stock is expensive at its current valuation of 91 times adjusted earnings, especially when Wall Street expects adjusted earnings to grow at 32% annually through fiscal 2026, which ends in March 2026. But I think that estimate leaves room for upside. Hyperscalers are aggressively investing in custom silicon to support AI workloads, and Arm will benefit from the Stargate Project. Patient investors should consider buying a very small position here. So, what did Nvidia sell? I suspect the company was simply taking some money off the table. Regardless, Arm is still its largest holding, accounting for 45% of its portfolio. So, I doubt Nvidia has lost confidence in Arm. SoundHound provides voice artificial intelligence solutions. Its products address use cases in the automotive, restaurant, customer service, and consumer electronics markets. Its platform also lets businesses develop custom conversational applications, and its customers include well-known brands like Chipotle, Stellantis, and Qualcomm. Investors should be aware that SoundHound competes against larger technology companies like Amazon and Microsoft. But SoundHound has been collecting voice AI data for more than 15 years and says its technology surpasses competing products in speed, accuracy, and complex language understanding. Analysts at Frost & Sullivan recently ranked SoundHound a conversational AI leader in healthcare. SoundHound continued to grow quickly in the fourth quarter, but it also continued to lose money. Revenue increased 101% to $34 million, but non-GAAP gross margin contracted 25 percentage points, and its adjusted loss widened to $0.05 per diluted share. The company also reported cash from operations of negative $108 million, and it has only $200 million in cash and equivalents on its balance sheet. Juniper Research expects voice AI spending to reach $160 billion by 2026. That puts SoundHound in front of a tremendous opportunity. But the stock currently trades at the absurdly expensive valuation of 49 times sales, a material premium to the three-year average of 22 times sales. That likely explains Nvidia's decision to sell in the fourth quarter. I would avoid chasing this stock at its current price, but it has a place on my watchlist.

SoundHound AI Is Sinking Today -- Is It Time to Buy the Stock? | The Motley Fool

SoundHound AI (SOUN -6.15%) stock is seeing another day of big sell-offs in Tuesday's trading. The company's share price was down 6.4% as of 1:50 p.m. ET and had been down as much as 10% earlier in the day. SoundHound AI and other growth-dependent artificial intelligence (AI) stocks are seeing big valuation pullbacks in today's trading as investors adjust to emerging macroeconomic risk factors. News that the Trump administration plans to move ahead with substantial new tariffs has added to existing concerns about higher-than-anticipated inflation, and reports that new restrictions will be placed on the export of semiconductors to China are also causing risk-off sentiment in the market. Adding another bearish catalyst for SoundHound AI stock, investors are feeling some nerves ahead of Nvidia's Q4 report tomorrow. The artificial intelligence (AI) giant's Q4 results and forward guidance will provide some insights into the overall growth outlook in the AI market. SoundHound stock is now down 55% year to date. Despite a big pullback recently, SoundHound AI's share price is still up 127% over the last year -- and the $3.5 billion company is valued at approximately 21 times this year's expected sales. Considering the company's heavily forward-looking valuation, it's reasonable to expect that the stock will continue to see high levels of volatility in the near term, and tomorrow's Q4 report for Nvidia looks poised to be a significant catalyst for the conversational AI-specialist's share price. Accordingly, investors who don't have a high tolerance for risk and volatility should still continue to steer clear from the stock right now. On the other hand, the big valuation retracement for SoundHound has meant that shares are no longer trading at such extreme valuation levels. The stock is still risky and commands a premium based on the business' expansion potential, but the company's recent sales growth and forward forecasts have been strong enough to support a bull case at current levels.

Nvidia Just Sold Its Entire Position in SoundHound AI. Should You Follow? | The Motley Fool

Nvidia has completely exited its position in voice-recognition software developer SoundHound AI. Following the end of each quarter, institutional investors managing over $100 million are required to file a form 13F with the Securities and Exchange Commission (SEC). A 13F itemizes the individual stocks money managers bought and sold during the most recent quarter. Investors can use these filings as tools to uncover where the "smart money" is looking for opportunity. While most investors probably think of the 13F as a requirement for banks and hedge funds, remember that non-financial institutions also make investments of their own. For example, Nvidia currently owns stock in five different public companies -- Arm Holdings, Applied Digital, Recursion Pharmaceuticals, Nebius Group, and WeRide. Last quarter, however, Nvidia completely exited its position in voice recognition artificial intelligence (AI) stock SoundHound AI (SOUN -5.50%). Should you follow Nvidia's decision to sell out of SoundHound AI? Read on to find out. When an investor decides to buy or sell a stock, it's reasonable to think such a decision supports how that investor actually feels about the company. While this logic is rational, it's not always the case. Sometimes an investor will sell a stock simply because they've been holding onto the position for a long time and want to recoup their capital. Other times the investor might exit a position because, frankly, the stock was not inherently strategic to the overall composition to the portfolio to begin with. In my opinion, Nvidia's decision to exit its stake in SoundHound AI sits somewhere between these two ideas. The chart below illustrates the share price activity around SoundHound AI during the fourth quarter. Clearly, the stock experienced some outsize momentum -- as the share price rose nearly fivefold in just three months. My guess is that Nvidia recognized this momentum and decided to cash out. Considering Nvidia only had about 1.7 million shares of SoundHound AI, the company likely generated between $20 million or $30 million of proceeds at most (depending on when it sold). That's a minuscule amount of money for Nvidia, which is valued at more than $3.4 trillion. While SoundHound AI has made some impressive strides when it comes to revenue acceleration, the company is still burning a lot of cash. To me, voice recognition software for vehicles is indeed an important opportunity for Nvidia; however, I think the company has superior options compared to SoundHound AI. Nvidia's "Magnificent Seven" cohorts Apple, Microsoft, Alphabet, and Amazon have all developed their own AI-powered voice assistants spanning various applications. Considering each of these companies is far more sophisticated and better capitalized compared to SoundHound AI, I think Nvidia has more potential should it decide to explore or deepen partnerships with its megacap peers in the area of voice recognition software more broadly. On top of that, my personal feeling is that autonomous driving and vehicle design are the most lucrative opportunities for Nvidia when it comes to the intersection of automotives and AI. Nvidia is already working closely with Mercedes-Benz, Volvo, BYD, Nio, and many others as it pertains to their respective AI ambitions. Knowing when to sell a stock is virtually impossible. Rather, an investor should make a decision to sell after weighing the pros and cons of continuing to hold onto a position. Considering Nvidia actually invested in SoundHound AI during a private funding round in 2017, combined with the lack of strategic value SoundHound AI presents relative to other players in the AI automotive market or voice recognition space, it becomes more reasonable that Nvidia decided to exit its position. Given its small size and lack of profitability, I see a position in SoundHound AI as quite speculative. If I were an investor in the stock, I would consider exiting or trimming my position. To me, SoundHound AI tends to exhibit the characteristics of a meme stock rather than a prudent investment.

Why SoundHound AI Stock Is Skyrocketing Today | The Motley Fool

SoundHound and other AI stocks are getting a valuation boost today as investors adopt more bullish positions ahead of the imminent release of Nvidia's fourth-quarter report. SoundHound AI's share price is also getting a boost from its recently unveiled new restaurant platform and upcoming earnings report. SoundHound has been hit with a wave of sell-offs lately, but the stock is quickly regaining some ground in today's trading. Following a recent bearish shift, investors are pouring back into AI stocks ahead of Nvidia's Q4 report -- due to be released after market close today. SoundHound AI stock is also getting a boost from the company's new restaurant-ordering platform. The conversational AI specialist published a press release yesterday detailing its updated Dynamic Drive-Thru platform and AI-powered improvements that are taking the service's capabilities to the next level. Nvidia isn't the only hot AI company set to publish earnings results this week. SoundHound AI is set to publish its own Q4 results after market close tomorrow, potentially setting the stage for the stock to see more big moves this week. With its last guidance update, the company said that it expected sales between $82 million and $85 million for its most recently completed fiscal year -- suggesting growth of 82% at the midpoint of the target range. For the current year, SoundHound AI last guided for sales to be between $155 million and $175 million, suggesting that revenue growth could accelerate significantly in the period.

Why SoundHound AI's Stock Is Plummeting Today | The Motley Fool

SoundHound AI (SOUN -8.54%) stock was selling off again in Monday's trading. The conversational artificial intelligence (AI) company's shares were down 8.8% as of 2:40 p.m. ET after having been down by as much as 11.9% earlier in the session. Tech stocks generally were pulling back as investors braced themselves for Nvidia's fourth-quarter earnings release on Wednesday. That report and conference call could have implications for SoundHound AI on multiple levels. Nvidia will publish this earnings season's most anticipated report this week, and investors are taking a moderately more cautious approach to AI stocks ahead of its release. The report could send valuation shock waves throughout the broader market, and AI stocks will likely see outsized movements, depending on how the chipmaker's earnings performance and guidance come in. As a mid-cap AI stock with a heavily forward-looking valuation, SoundHound AI could see a large valuation shift. Nvidia had been an investor in the conversational AI specialist, but its most recent 13F filing revealed that it sold all of its SoundHound stock during the fourth quarter. That added to investors' concerns that the tech giant might be planning to encroach on SoundHound's turf. Nvidia's report and conference call could highlight new agentic AI offerings that would put new competitive pressures on SoundHound. SoundHound AI stock has been highly volatile lately, and that trend looks poised to continue this week. The company's valuation multiples have come down a lot from their highs, but it's still trading at roughly 23 times this year's expected sales.

Why Artificial Intelligence Stocks SoundHound AI, IonQ, and C3.ai Are Struggling Today | The Motley Fool

Tech stocks bore the brunt of the sell-off today after multiple media outlets reported that President Donald Trump's administration plans to expand chip controls largely aimed at China. Former President Joe Biden had taken measures on this matter. Right before leaving office, Biden proposed tougher chip controls that are technically set to go into effect within a few months. Bloomberg, citing anonymous sources, reported today that officials in the Trump administration recently held meetings with officials in Japan and the Netherlands about preventing companies like Tokyo Electron and ASML Holding from storing gear used to make chips in China. There have also been discussions about preventing a wider range of chips made by Nvidia from getting into the hands of Chinese companies. Officials ramped up these proposals following the emergence of DeepSeek, which allegedly used older Nvidia chips to make a powerful AI chatbot much cheaper and with far fewer resources than thought possible. In other market news, investors continue to de-risk on signs of a potentially weakening U.S. consumer. The latest sign came this morning from the Conference Board, which reported that Consumer Confidence in February fell 7 points to 98.3, the lowest level since June 2024 and the largest monthly decline since August 2021. In more company-specific news, Cantor Fitzgerald analyst Thomas Blakey recently assumed coverage on SoundHound with a neutral rating and $10 price target. Blakey is impressed with the AI-powered voice recognition company, writing in his research note that "the company's Voice AI technology works better than any we have tested" and that he sees "multiple pathways to growth" including from subscription revenue. However, Blakey is neutral because he thinks shares have run too far too fast, trading around 20 times his 2026 estimated enterprise value. Meanwhile, Bloomberg, citing anonymous sources, reported earlier today that IonQ, a company working to commercialize quantum computers, is close to finalizing the purchase of a company called ID Quantique, which focuses on network encryption specifically for quantum computers. The transaction would value the company at about $250 million. I don't see much company-specific news for C3.ai, although the company will report earnings tomorrow and is likely getting lumped in with broader sentiment surrounding AI. After such an epic run in 2024, AI stocks are finally starting to feel some heat from many sources including Trump's potential chip controls, Nvidia's upcoming earnings tomorrow, the emergence of DeepSeek, high valuations, and weakening consumer sentiment. SoundHound, IonQ, and C3.ai all have immense potential, but remember, they all trade at multibillion-dollar market caps and have yet to turn a profit, so any turbulence in AI or tech is likely to hit these names hard. I personally don't think you need to rush into these names just yet, but if you do decide to invest, make sure to take a long-term approach, as the road this year could be rocky.