Soundhound AIS (Nasdaq: Soun) Shares rose no less than 883%last year. The Artificial Intelligence (AI) shares, however, will fall around 55% compared to its peak at the end of December.
You can blame part of this decline of the Federal Reserve. Investors were shocked when the FED indicated that there could be fewer interest rate letings than expected in 2025. This ensured that many high -flying growth stocks, including Soundhound AI, fell.
However, another perpetrator was behind Soundhound AI’s cap of almost 30% in recent days – Nvidia(Nasdaq: NVDA). Is the beaten AI shares a purchase after the sale based by Nvidia?
One of the best things that can happen for a small company is to score a large investment of a large company. Many investors see that as a sign they can have more confidence in the small company.
Nvidia invested for the first time in Soundhound AI in 2017 as part of a financing round of $ 75 million. In February 2024, the huge GPU maker revealed in a regulatory application how great his interest was in Soundhound. This disclosure offered a large catalyst for the small AI stock.
But the same hand that gives can also take away. Last week Nvidia submitted another legal submission that demonstrated that it had completely left its interest in Soundhound AI. Just as investors considered Nvidia’s initial position in Soundhound as a voice of trust, they saw the sale of all his shares as a voice of no trust.
That could of course read between the lines, of course. Nvidia can have various reasons to sell all its Soundhound AI shares that do not reflect less optimism about the company. However, perceptions are important – and Nvidia’s sale of Soundhound was seen in a negative light.
But there is a good thing to make that the investment produce for Soundhound AI is the same as before the disclosure of Nvidia. The prospects of the company still seem to be promising.
The sale of Soundhound AI is booming. In the third quarter of 2024, the company reported its highest turnover ever with sales by 89% years after year. Turnover was also more diversified than in the past, with 12% from the largest customer of Soundhound compared to 72% in the period of the previous year.
This diversification also improved in the industry. In Q3 2023, more than 90% of Soundhound came from Automotive customers. A year later, customers in the automobile, restaurant, financial services, health care and insurance sectors each contributed between 5% and 25% of the total turnover.
There is still a huge opportunity for STEM AI technology with an estimated total addressable market of at least $ 140 billion. Even with the success of Soundhound so far at automotive and restaurant customers, it only scratches the surface of what can be done with Voice AI in these areas.
However, the negative aspects of the investment outputs for Soundhound AI also remain intact. The company is still not profitable. It remains confronted with important competition, including various rivals with many deeper bags. The valuation of Soundhound is also steep, even after the recent decrease in shares that trade with almost 50 times.
So is Soundhound AI shares a purchase after the sale based by Nvidia? My answer is the same as it was before the news broke about the sale of Nvidia from his Soundhound shares: maybe.
I think that risk -avoiding investors should definitely avoid Soundhound AI. The stock is probably very volatile in the coming months (just like in the past). It is possible that large competitors can eventually prevail above Soundhound on the market.
On the other hand, Soundhound AI does many of the right things to grow his business. The opportunities of the company are really great if it can perform the competition well and surpass the competition. Aggressive investors who may keep high risk, potentially high-rewards shares can find soundhound ai an intriguing choice and one that is now available at a cheaper price thanks to Nvidia.
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*Stock Advisor Return on February 21, 2025
Keith Speights has no position in one of the aforementioned shares. The Motley Fool has positions and recommends Nvidia. The Motley Fool has a disclosure policy.
Is Soundhound AI shares a purchase after his sale based on Nvidia? was originally published by the Motley Fool
