The development of artificial intelligence (AI) is one of the most exciting trends in capital markets today. One company I’ve been following for a while is a company that develops speech recognition software. Soundhound AI (Thorn 1.60%).
Big technology companies have already expressed interest in this area. for example, apple Although it boasts Siri and Shazam as part of its ecosystem, microsoft Nuance acquired it just two years ago for a whopping $20 billion.Moreover, both Amazon and alphabet has made voice software services an integral part of smart home products.
On February 15th, SoundHound AI stock soared 67% following news that members of the Magnificent Seven were announced. Nvidia He announced his investment in the company. The stock may be trending higher, but is the relationship with Nvidia enough to buy SoundHound AI?
Before you buy into the hype, let’s take a closer look at what’s actually going on.
Why are stock prices rising?
SoundHound AI went public in 2022 with the backing of a special acquisition purpose company (SPAC). Like many of his SPAC stocks, SoundHound AI received a lot of interest from investors leading up to its market debut.
Unfortunately, the hype began to fade after a series of lackluster earnings reports, and the stock price fell from a peak of nearly $15 per share to less than $1 per share before 2022 ended. SoundHound stock is trading at $3.76 following Thursday’s 67% rise.
Last week’s spike is related to Nvidia’s 13F filing with the SEC. In the filing, Nvidia disclosed his investment interests in five companies, including SoundHound AI.
If this wasn’t enough to make investors angry, one of Wall Street’s most outspoken technology analysts seems to be praising SoundHound AI’s ability to attract such high-profile investors to NVIDIA. Dan Ives of Wedbush Securities posted on his X (formerly his Twitter) and shared some thoughts on how SoundHound AI could benefit from his partnership with Nvidia.
Nvidia just made a small investment in SOUN per application last night. With AI godfather Jensen and his NVDA backing his SOUN, this is a clear positive indicator for the company as this investment further solidifies the company’s brand in the AI revolution. thinking about. 🏆🔥
— Dan Ives (@DivesTech) February 15, 2024
But smart investors always do their due diligence before making an investment, especially in a ramshackle company like SoundHound AI.
Image source: Getty Images.
When in doubt, zoom out
One of my predictions for 2024 was that merger and acquisition activity would increase. With so many companies looking to capitalize on the momentum created by AI, big tech companies are likely to move aggressively this year and start acquiring smaller platforms to complement their existing offerings.
Upon hearing the news that Nvidia had invested in SoundHound AI, I initially believed that my prediction had already come true. However, upon further investigation, we found something very interesting.
When SoundHound AI was still a private company, it raised hundreds of millions of dollars, primarily from venture capital (VC) firms. However, the company also attracted funding from a number of prominent technology companies, including: tencent and samsung.
And back in 2017, Nvidia also participated in a $75 million investment round.
Should you invest in SoundHound AI?
Investors are cautioned against reading too much into Ives’ social media posts, given Nvidia’s ties to SoundHound AI in recent years. The company already has many great partners. Qualcomm, oracle, blockand toast. The relationship with Nvidia isn’t technically new. It’s also unclear how, or if, SoundHound AI and Nvidia intend to work together.
The role that artificial intelligence can play in speech recognition software should not be underestimated. This is clearly an area that many of the big tech companies are researching, and I think voice-based products are still in their infancy. The potential for SoundHound AI could be huge, but investors should be careful about pouring money into the stock based on this latest news.
SoundHold AI is gaining significant momentum. This is an opportunity to make a quick profit, but if you’re not careful you can end up being left with a bag holder. A smarter strategy is to see how things play out for SoundHound AI over the next few quarters.
It will also be interesting to see if the company’s relationship with Nvidia becomes measurable. But for now, it may be best to stay on the sidelines.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Adam Spatacco has held positions at Alphabet, Amazon, Apple, Block, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Block, Microsoft, Nvidia, Oracle, Qualcomm, Tencent, and Toast. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
