What is the hottest artificial intelligence (AI) stock on the market right now? One might think that it is Nvidia (NASDAQ:NVDA). Finally, the giant chipmaker recently reported underwhelming fourth-quarter results and predicted that strong growth will continue.
But there's at least one other AI stock outperforming Nvidia so far in 2024: SoundHound AI (NASDAQ:SOUN). Shares of the conversational AI leader are up more than 80% so far this year. The company is expected to report its fourth-quarter results later this week.
Should you buy SoundHound AI stock ahead of Thursday's big announcement? Nvidia has.
Nvidia's AI buying spree
SoundHound AI shareholders can thank Nvidia for its huge year-to-date profit. The stock floundered until Nvidia filed its 13F-HR filing with the U.S. Securities and Exchange Commission on February 14. That filing revealed that Nvidia had purchased more than 1.73 million shares of SoundHound AI.
Of course, Nvidia's investment in SoundHound amounted to pocket money for the giant GPU maker. Four other AI stocks were also listed in the regulatory filing, two of which represented significantly larger purchases for Nvidia. However, many investors viewed Nvidia's entry into SoundHound AI as a form of support for the small company.
This wasn't the first time Nvidia invested in SoundHound AI. In 2017, Nvidia, along with several other investors, funded a $75 million capital raise for the small company while it was still privately held.
Why SoundHound AI is fascinating
I think SoundHound AI is, without question, a fascinating company. The company has built an impressive customer base in recent years thanks to voice AI technology that is arguably the best on the market.
SoundHound AI is particularly successful in the automotive industry. A who's who of automakers use its AI platform, including Honda, HyundaiKia and that Stellantis Family of cars (Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Opel and Peugeot).
The story goes on
The company has also made significant progress in the restaurant market. His partners include Beef O'Brady's, Krispy KremeOracle Food and Beverage, toastand White Castle.
SoundHound estimates its total addressable market at more than $160 billion. In addition to automotive and restaurant applications, the company is actively seeking opportunities in the entertainment and Internet of Things markets. It also hopes to target financial services, healthcare, retail and more.
The company is growing by leaps and bounds. In Q3 2023, SoundHound AI revenue increased 19% year-over-year and 52% sequentially. It also achieved a strong gross margin of 73%.
Should you buy SoundHound AI shares before Thursday?
SoundHound in November gave broad fourth-quarter revenue guidance of between $16 million and $20 million. The company also expects to generate positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter. If SoundHound beats the average analyst estimate of $17.75 million and hits its EBITDA target, its shares could rise.
So should you buy SoundHound AI stock ahead of the company's Q4 update on Thursday? I would not go so far. Scrambling to buy SoundHound AI quickly to make a huge profit with better-than-expected quarterly results is a gamble.
On the other hand, SoundHound offers a great long-term opportunity with its voice AI technology. It continues to deliver solid growth. If you're an aggressive investor looking for a still small AI stock, I think SoundHound AI is worth a serious look.
Should you invest $1,000 in SoundHound AI now?
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Keith Speights has no position in any of the 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 ahead of Thursday's big announcement? Nvidia has. was originally published by The Motley Fool