Shares of SoundHound AI experienced a significant surge on Thursday morning, skyrocketing by as much as 80%. The driving force behind this sudden increase was the revelation that the prominent chipmaker Nvidia had taken a stake in the company. In a disclosure filing with the Securities and Exchange Commission, Nvidia revealed that it had acquired 1.73 million shares of SoundHound AI Class A stock, amounting to approximately $3.9 million.
This move by Nvidia represents a vote of confidence in SoundHound AI, an artificial intelligence (AI) specialist that provides voice and audio recognition software to businesses. SoundHound AI has developed cutting-edge voice recognition solutions primarily catering to the entertainment, restaurant, and automotive industries.
One noteworthy application of SoundHound’s AI technology is its voice-ordering capabilities for phone orders, self-serve kiosks, and drive-thrus. This is particularly relevant as restaurants continue to grapple with staffing challenges amid the ongoing labor shortage.
Although Nvidia’s acquisition accounts for less than 1% of SoundHound’s outstanding shares, it signifies a significant alliance between the two companies. Interestingly, reports suggest that Nvidia has been closely monitoring SoundHound AI since 2017 and even participated in a funding round back then.
Currently, SoundHound AI already provides voice solutions to numerous automotive brands, making up 25% of all vehicles globally that incorporate voice controls, which translates to around 20 million units. The company also aims to expand its presence in various other sectors, including finance, healthcare, retail, and more.
Investors considering SoundHound AI should be aware of the stock’s valuation. At 19 times sales, it may be viewed as relatively expensive. Additionally, the company has yet to turn a profit, introducing an element of risk for potential investors. Nonetheless, for those willing to tolerate some volatility, investing in SoundHound AI could prove fruitful.
The partnership between SoundHound AI and Nvidia reflects the promising trajectory of the AI industry and the increasing demand for voice recognition technology in various sectors. As SoundHound AI continues to innovate and expand its reach, investors will be watching closely to see how this collaboration unfolds.
