Around two years have passed since the advent of OpenAI’s ChatGPT drew attention to the generative artificial intelligence (AI) realm. Meanwhile, key industry players like Nvidia and Super Micro Computer have markedly enhanced their market valuations by offering essential hardware components.
Nonetheless, the landscape of consumer-facing AI software seems poised for evolution. Let’s delve into why SoundHound AI (NASDAQ: SOUN) could present an enticing avenue for investors looking to capitalize on this facet of the industry.
A business with clear real-world applicability and potential
Despite its current market capitalization of $1.8 billion, SoundHound AI boasts a rich history, with its establishment dating back to 2005. Over the past two decades, the company has honed its expertise in speech recognition software tailored to decipher human speech. This technology seamlessly aligns with large language models (LLMs), enhancing the functionality of AI technology powering text-based chatbots for real-world applications such as vehicle drive-thrus and in-car entertainment systems.
SoundHound stands out notably due to its collaborations with mainstream consumer enterprises. In a recent development, the company introduced its voice assistant featuring integrated ChatGPT in Stellantis vehicles across various European markets. This functionality empowers drivers to seek information and assistance, ranging from general queries to discovering scenic routes and specialty dining establishments.
Furthermore, SoundHound has initiated partnerships with multiple fast-food chains like White Castle, Jersey Mike’s, and Krispy Kreme, with these establishments trialing SoundHound’s voice assistants in their drive-thru operations. These collaborations not only reflect a vote of confidence in SoundHound’s speech recognition technologies but also position the company to cultivate network effects and fortify an economic moat in a potentially competitive industry landscape.
Focusing on Future Horizons
SoundHound operates in a domain bustling with competition, as evidenced by Microsoft‘s acquisition of Nuance Communications, the entity behind Apple’s Siri, for a whopping $19.7 billion in 2022. Noteworthy tech conglomerates like Google and Amazon are also investing extensively in this sector via in-house research and development initiatives, placing SoundHound as a relatively modest player in this expansive arena.
Nevertheless, SoundHound is carving a distinctive niche by concentrating on applications within the automotive and dining realms. The company’s management has undertaken a series of acquisitions to broaden its competencies.
For instance, in June, SoundHound acquired Allset, an online ordering platform connecting restaurants directly with local consumers sans third-party delivery apps. This strategic move follows the merger with SYNQ3 Restaurant Solutions last year, a move that saw over 10,000 restaurants adopting its voice AI services. Propelled by these acquisitions, SoundHound aims to realize a “voice commerce ecosystem,” expected to foster synergies with automobiles, televisions, and smart appliances.
Image source: Getty Images.
In a significant move earlier in the year, hardware behemoth Nvidia poured $3.4 million into acquiring SoundHound stocks. Notably, both entities have commenced a collaboration under Nvidia’s self-driving solution, ‘Nvidia Drive,’ wherein SoundHound’s voice-AI capabilities will be integrated.
Is SoundHound AI a Strategic Investment?
The prime allure of SoundHound for most investors stems from its operational momentum. Noteworthyly, second-quarter revenue surged by an impressive 54% year-over-year, reaching $13.5 million. Although operating losses concurrently escalated by 33% to approximately $22 million, such losses are customary for growth-oriented firms scaling up their operations. Armed with roughly $200 million in reserves, SoundHound is well-equipped to withstand several more quarters of its prevailing cash outflow before necessitating external funding.
While SoundHound’s mounting losses and uncertain path to profitability may deter risk-averse investors, such caution is understandable. Nonetheless, the stock presents an enticing avenue to delve into the software aspect of the AI sector within a diversified investment portfolio.
Contemplating a $1,000 Investment in SoundHound AI
Before contemplating an investment in SoundHound AI, weigh in the following:
The Motley Fool Stock Advisor analyst team recently pinpointed what they deem as the potential investment opportunities poised to surge.
A Potent Mix: Stock Advisor’s Top Picks and Historical Returns
Unearth the Hidden Gems
It’s a tale as old as time — the quest to uncover the next big thing in the stock market. A frenzy of excitement and anticipation surrounds the hunt for that elusive golden egg. Investors scour every nook and cranny, hoping to strike it rich with a well-placed bet. Time and time again, new contenders emerge, each vying for a coveted place among the elite.
Stock Advisor Steers the Ship
In the ever-evolving landscape of investments, Stock Advisor stands as a guiding light for investors. With a meticulous eye for detail and a knack for spotting potential, Stock Advisor has become a beacon of hope for those navigating the choppy waters of the stock market. Through careful analysis and shrewd judgment, Stock Advisor unearths the hidden gems that have the potential to reshape portfolios and fortunes.
A Rich Tapestry of Success
Reflecting on past triumphs can provide valuable insights into the future. Casting a glance back at history, one cannot help but marvel at the success stories that have unfolded over the years. Take, for instance, the case of Nvidia, a once-obscure entity that rose to prominence after earning a coveted spot on the Stock Advisor’s list back in April 15, 2005. An investment of $1,000 at the time would have ballooned into an astounding $720,542, a testament to the transformative power of smart investing.
Riding the Wave of Growth
Stock Advisor’s track record speaks volumes about its prowess in identifying winners. The service has outshone the S&P 500 by more than fourfold since its inception in 2002. By delivering two new stock picks each month and offering a comprehensive blueprint for success, Stock Advisor has paved the way for investors to ride the wave of growth and prosperity.
Embrace the Future with Confidence
As the investment landscape continues to evolve, Stock Advisor remains at the forefront of innovation and opportunity. With a finger on the pulse of the market and a keen eye for budding stars, Stock Advisor equips investors with the tools they need to embrace the future with confidence and poise. By leveraging insights from seasoned analysts and staying abreast of market trends, investors can navigate the turbulent seas of investing with ease.