You may be wondering, what are the hottest artificial intelligence (AI) stocks on the market right now? Nvidia (NASDAQ:NVDA). After all, the giant chipmaker recently reported impressive fourth-quarter results and predicted continued strong growth.
However, there is at least one AI stock that is outperforming Nvidia in 2024. Soundhound AI (NASDAQ: SOUN). The conversational AI leader’s stock is up more than 80% so far this year. The company is scheduled to announce its fourth quarter results later this week.
Should you buy SoundHound AI stock before Thursday’s big announcement? Nvidia does.
Nvidia’s AI acquisition scandal
SoundHound AI shareholders can thank Nvidia for its significant year-to-date gains. The stock price was volatile until Nvidia filed its 13F-HR filing with the U.S. Securities and Exchange Commission on February 14th. The filing revealed that Nvidia bought over 1.73 million shares of his in SoundHound AI.
Indeed, Nvidia’s investment in SoundHound represents pocket change for the giant GPU maker. Four other AI stocks are listed in regulatory filings, two of which represent larger acquisitions for Nvidia. However, many investors saw Nvidia’s initiation of a position in SoundHound AI as an endorsement of the small company.
This isn’t the first time Nvidia has invested in SoundHound AI. In 2017, NVIDIA, along with several other investors, provided his $75 million financing for the small company, which was still privately held.
Why SoundHound AI is interesting
I definitely think SoundHound AI is an interesting company. The company has built an impressive customer base in recent years thanks to perhaps the best voice AI technology available.
SoundHound AI has been particularly successful in the automotive industry. The “who” of automakers using AI platforms Honda, hyundaiKia, and Stellantis Car family (Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Opel, Peugeot).
The company is also making major inroads into the restaurant market. Its partners include Beef O’Brady’s; Crispy creamOracle Food and Beverage, toastand White Castle.
SoundHound estimates its total addressable market to be more than $160 billion. In addition to automotive and restaurant applications, the company is actively pursuing opportunities in the entertainment and Internet of Things markets. It also hopes to target financial services, healthcare, and retail.
The company is growing by leaps and bounds. In the third quarter of 2023, SoundHound AI’s revenue increased by 19% year-over-year and by 52% sequentially. It also achieved a high gross profit margin of 73%.
Should you buy SoundHound AI stock before Thursday?
SoundHound provided fourth-quarter revenue guidance in November ranging from $16 million to $20 million. The company also expects to have positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fourth quarter. If SoundHound beats analysts’ average estimate of $17.75 million and hits its EBITDA target, the company’s stock could rise.
So should you buy SoundHound AI stock before the company’s Q4 update on Thursday? It won’t go that far. It’s a gamble to rush into buying SoundHound AI in hopes of making a big profit on better-than-expected quarterly results.
On the other hand, SoundHound has a huge long-term opportunity with its voice AI technology. We continue to see steady growth. If you’re an active investor looking for smaller AI stocks, I think SoundHound AI is worth serious consideration.
Should you invest $1,000 in SoundHound AI right now?
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Keith Speights has no position in any stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Toast. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
Should you buy SoundHound AI stock before Thursday’s big announcement? NVIDIA.Originally published by The Motley Fool
