Wouldn’t it surprise you to learn that a stock representing an artificial intelligence solution managed to surpass the performance of Nvidia and Palantir Technologies in the past year?
Indeed, in the year 2024, the stocks of SoundHound AI (SOUN) skyrocketed by an impressive 836%. This significant increase surpassed the stellar performance of many other prominent names often associated with the AI industry’s success story.
This year, quite unlike previous ones, the SoundHound AI stock initially took a significant dive, dropping around 46% during the initial months.
Let’s examine why SoundHound AI initially caught the attention of investors and then discuss some elements that led investors to become less enthusiastic during the initial half of the year.
Although SoundHound AI might appear as an artifact from the past, astute investors recognize that the company is strategically placed to seize opportunities arising from two burgeoning trends in the wider AI sector.
Is now a good time to invest in the SoundHound AI sell-off? Read on to find out.
What fueled SoundHound’s rise to begin with?
SoundHound AI made a splash when it was disclosed that Nvidia, currently the tech world’s favorite AI company, owned a minor stake in the firm. This association sparked various speculations among investors about potential collaborations between the two entities and the possibilities they might bring.
I find myself in a fascinating niche within the realm of artificial intelligence, where SoundHound AI thrives. With a focus on natural language processing (NLP), this technology has crafted voice-activated AI assistants. These digital companions share similarities with well-known voices such as Amazon’s Alexa and Apple’s Siri, but they are versatile enough to be utilized across various industries.
It’s unfortunate for those who invested in SoundHound AI towards the end of last year that the stock experienced significant declines during the first half of this year. Interestingly, one major factor contributing to this downturn was Nvidia. Recent filings showed that Nvidia, known as the chip king, had sold off its stake in SoundHound AI. This move might have triggered doubts and created a negative outlook among investors towards SoundHound AI, an AI voice developer.
What could be in store for SoundHound AI during the second half of the year?
One major application for SoundHound AI’s voice assistants is within the automotive sector. The company has formed collaborations with several prominent car manufacturers, such as Stellantis, Hyundai, Honda, and Lucid.
As an observer, I’ve noticed an exciting development: voice assistants are finding their way into car infotainment and navigation systems. This integration promises a significant enhancement of convenience for drivers. Interestingly, a study by SoundHound AI suggests that this could potentially open up a $35 billion market opportunity within the automotive industry.
It’s possible that autonomous driving will become more common as everyday AI usage, opening up a profitable opportunity for SoundHound AI to grow within the automotive sector by collaborating closely on the creation of intelligent vehicle control systems.
Waymo, the autonomous taxi fleet operated by Alphabet, can be found in five significant urban areas and carries out over 250,000 paid trips weekly. Furthermore, Waymo’s collaboration with Uber enhances the strategic importance of autonomous driving for industries like ride-sharing and delivery. Lastly, Tesla has recently entered the scene with its Robotaxi service debut in Austin, Texas during the past month.
In the shift from research and development to the initial stages of earning profits and widespread use for autonomous vehicles, SoundHound AI appears particularly well-positioned to capitalize on this emerging market.
Is SoundHound AI stock a buy right now?
Despite a significant drop in SoundHound AI’s share price, its overall valuation remains high. As depicted in the chart below, SoundHound AI currently has a price-to-sales (P/S) ratio of 42. For comparison, this level was typically reached by major internet stocks during the dot-com bubble in the late ’90s.
To emphasize that while SoundHound AI’s stock may appear inexpensive, its fundamental evaluation indicates that the share prices remain inflated, almost at bubble stage – a situation that persists despite a nearly 50% drop in the stock value.
Despite my ongoing interest in how SoundHound might capitalize on the surge of autonomous vehicles and advanced AI-driven voice technology, I believe it’s best categorized as a high-risk investment opportunity.
While shares might surge in the second part of the year, this could be primarily due to story-led buying rather than substantial investment prospects. At present, I view SoundHound AI as more of a trading option than a long-term “buy-and-forget” investment opportunity.
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2025-07-19 12:14