Latest news with #ChatAI
Yahoo
16-05-2025
- Business
- Yahoo
Did Nvidia Make a Colossal Mistake by Selling SoundHound AI Stock?
SoundHound AI stock surged by almost 30% since the company reported its financial results for the first quarter of 2025. Nvidia owned 1.73 million shares in SoundHound AI, but the chip giant sold its entire stake toward the end of 2024. SoundHound's business is growing rapidly, but that doesn't mean Nvidia made the wrong move by selling the stock. 10 stocks we like better than SoundHound AI › Nvidia (NASDAQ: NVDA) added an eye-popping $2.8 trillion to its market capitalization since the start of 2023, thanks to soaring demand for its data center chips that are the best in the world for developing artificial intelligence (AI). The company also invested in a portfolio of other AI stocks, and SoundHound AI (NASDAQ: SOUN) was one of them. SoundHound is a specialist in conversational AI, and it has an impressive list of customers that includes some of the biggest brands in the world from industries like hospitality and car manufacturing. But when Nvidia filed its 13-F with the Securities and Exchange Commission for the final quarter of 2024, SoundHound stock was notably missing -- it turns out the chip giant sold its entire stake toward the end of last year. SoundHound recently reported its latest financial results for the first quarter of 2025 (ended March 31), and its stock soared by almost 30% since. Did Nvidia sell its position too early? SoundHound's conversational AI technology understands voice prompts and can respond in kind, and it has been deployed by some of the biggest businesses in the world to transform the way we interact with our devices, our cars, and even our favorite restaurants. SoundHound is active in almost 13,000 quick-service restaurants, operated by chains like White Castle, Chipotle, and Papa John's. Its Voice AI technology can autonomously take orders from customers over the phone, in-store, and in the drive-thru, reducing the workload on employees so they can spend more time on other tasks. SoundHound also offers a product called Employee Assist, which stands ready to provide workers with information on menu items and in-store procedures. In the automotive industry, SoundHound's Chat AI in-car voice assistant is used by top brands like Hyundai, Kia, and Stellantis (the owner of Chrysler, Jeep, and Dodge). It can answer questions on a broad range of topics, and it can also provide-real time information on sports scores and stock prices. SoundHound also launched a new platform called Voice Commerce earlier this year, which allows drivers to place food orders from the comfort of their vehicle. It can even recommend restaurants and provide directions using the car's GPS system. SoundHound expanded its product portfolio even further when it acquired another AI company called Amelia in August last year. Amelia's platform allows businesses to create custom AI agents that can be deployed to serve customers or even help employees with specific tasks. It's used in industries like healthcare, financial services, insurance, and more, which is helping SoundHound diversify its revenue base. SoundHound generated $29.1 million in total revenue during the first quarter of 2025, which was a whopping 151% increase from the year-ago period. The inclusion of Amelia's revenue boosted the result, but the company also continued to experience broad demand for its core products. Management is no longer updating investors on SoundHound's order backlog, but CFO Nitesh Sharan said it continued to grow from the previous quarter three months earlier, when it was an eye-popping $1.2 billion. The company expects to convert that backlog into revenue over a period of six years, so it could be a great predictor of future top-line results. The strong first-quarter results prompted SoundHound to reaffirm its full-year guidance for 2025, suggesting revenue could soar 97% year over year to $167 million (at the midpoint of the forecasted range). Nvidia never disclosed why it sold SoundHound stock, but its current valuation is one reason investors might want to steer clear for now. It trades at a price-to-sales (P/S) ratio of 40.8 as of this writing, which makes it significantly more expensive than Nvidia itself. That doesn't make much sense considering the AI chip giant is one of the highest-quality companies in the world, with a track record of success spanning decades: SoundHound stock looks a little less expensive if we value it using its future potential revenue. If we assume the company generates $167 million this year as management expects, that places its stock at a forward P/S ratio at 27.1. But considering that figure is still higher than Nvidia's P/S ratio today, I definitely wouldn't say the stock looks attractive. Plus, SoundHound's bottom line poses a key risk. The company generated a rare profit of $129 million on a generally accepted accounting principles (GAAP) basis during the first quarter, but only because of a $176 million benefit relating to one of its acquisitions. On a non-GAAP basis, which excludes one-off and non-cash components, SoundHound still lost $22.3 million, which was a 10% increase from the year-ago period. SoundHound had $246 million in cash and equivalents on hand at the end of the quarter, so it can afford to keep losing money at the current pace for the next couple of years. However, if the company does require more cash in the future, it might have to issue more stock, which would result in significant dilution for existing shareholders. Nvidia only held 1.73 million shares in SoundHound, which would have been worth just $19.5 million based on its current stock price. Considering Nvidia is nearly a $3.3 trillion company, even a complete loss probably wouldn't have affected its finances at all. Even though we don't know why Nvidia sold its entire stake, SoundHound's valuation is enough reason for investors to tread very carefully if they are looking to buy. Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $620,719!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,511!* Now, it's worth noting Stock Advisor's total average return is 959% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Nvidia. The Motley Fool recommends Stellantis and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Did Nvidia Make a Colossal Mistake by Selling SoundHound AI Stock? was originally published by The Motley Fool
Yahoo
01-05-2025
- Business
- Yahoo
Should You Buy SoundHound AI Stock Before May 8? This Recent Move by Nvidia Might Hold the Answer
Nvidia supplies the best data center chips for developing artificial intelligence (AI), and it has become one of the world's largest companies. Nvidia holds a portfolio of other AI stocks, and SoundHound AI used to be one of them, but the chipmaker exited its position at the end of 2024. SoundHound is down 60% from its all-time high, and its Q1 financial report on May 8 could determine the stock's next move. Nvidia (NASDAQ: NVDA) has added an eye-popping $2.3 trillion to its market capitalization since the beginning of 2023, thanks to soaring demand for its data center chips that are the best in the industry for powering and training artificial intelligence (AI). Nvidia has put some of its incredible wealth to work by investing in a small portfolio of other AI stocks. SoundHound AI (NASDAQ: SOUN) was one of them, but the chip giant sold its entire stake during 2024's fourth quarter, according to its latest quarterly 13-F filing with the Securities and Exchange Commission. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » SoundHound is a conversational AI specialist, and it's experiencing strong demand for its software from some of the largest brands in the world. But its stock lost its momentum after investors learned of Nvidia's exit, and it's currently down 60% from its record high. SoundHound is scheduled to report its financial results for the first quarter on May 8. Could its dip represent a buying opportunity for investors ahead of the report? Chatbots like OpenAI's ChatGPT were originally designed to interpret text-based prompts, whereas SoundHound has always focused on conversational AI, which parses voice-based prompts and responds in kind. Conversational AI is more practical for a range of uses in everyday life, which is why SoundHound AI's client list includes some of the world's biggest restaurant chains and car manufacturers. Its technology is active in more than 10,000 quick-service restaurant locations from operators like Chipotle, Krispy Kreme, White Castle, and more. They use it to automate food ordering in-store, over the phone, and in the drive-thru lane, which reduces the number of employees those businesses require. Plus, SoundHound also offers a tool called Employee Assist that can give workers detailed instructions for making menu items or maintaining critical equipment. Leading automotive manufacturers like Kia, Hyundai, and Stellantis (owner of the Chrysler, Jeep, and Dodge marques) are also using SoundHound's Chat AI in-car assistant. It can do various tasks from locating the nearest restaurant to explaining what a particular warning light means on the vehicle's dashboard -- and it's controlled entirely with voice prompts. Manufacturers can customize Chat AI with different voices and personalities to suit their brands. SoundHound is now marrying its restaurant segment with its automotive segment with its new in-vehicle commerce platform. The software enables drivers to place food orders while they are on the move without picking up a phone. It plugs into the car's GPS navigation system to locate the most suitable vendors, so the driver can ask their in-car assistant to order them a meal from the nearest Chinese restaurant (for example). In August, the company acquired AI developer Amelia, which is helping it break into new industries like healthcare, financial services, and insurance. In fact, SoundHound's largest customer accounted for just 14% of its total revenue in 2024, which was down from more than half in 2023. Having a more diversified revenue base can drive steadier growth and reduce risk in the long run. SoundHound AI generated $84.7 million in revenue during 2024, which was an 85% increase from the previous year. Management believes its growth could accelerate to a whopping 97% in 2025, as it's forecasting revenue of $167 million (at the midpoint of its guidance range). The company's first-quarter result could dictate whether or not management increases that guidance, so this is something investors should pay attention to on May 8. The second metric to watch is SoundHound's order backlog. It stood at $1.2 billion at the end of 2024, which was an eye-popping 75% year-over-year increase. The company expects to convert that figure into actual revenue over the next six years, so it could be a great predictor of future results. If its backlog continues to grow at a rapid pace, it's reasonable to expect SoundHound's revenue growth to maintain its strong momentum. However, SoundHound's rapid top-line expansion is coming at a steep cost. The company lost $350.7 million during 2024 on a GAAP (generally accepted accounting principles) basis, which was 295% more than its loss in 2023. Even after excluding one-off outlays and non-cash expenses like stock-based compensation, SoundHound still took a $69.1 million non-GAAP loss for the year. With just $198 million in cash and equivalents on its balance sheet as of the end of 2024, SoundHound can't afford to keep losing money at that pace for long. The company might have to sacrifice some revenue growth to staunch the bottom-line bleeding. Otherwise, shareholders are likely to face significant dilution through further secondary stock offerings. Despite its 60% decline from its all-time high, the stock is still expensive. It trades at a price-to-sales (P/S) ratio of 38.1, which is nearly twice the P/S ratio of Nvidia. That doesn't make much sense, considering Nvidia is arguably the highest-quality AI company in the world. SoundHound AI stock looks a little cheaper valued based on its expected future revenue. For example, assuming the company will generate $167 million in revenue this year as management expects, its forward P/S ratio would be 22.7 -- but that's still a premium valuation, especially considering the risks associated with its steep losses. Nvidia never disclosed why it sold its stake in SoundHound, so it's impossible to know whether valuation played a role. Nvidia only held 1.73 million shares, which would be worth around $16.5 million at the current price, so even a complete loss wouldn't have affected the $2.7 trillion chip giant's finances meaningfully. However, Nvidia's absence on the share register certainly took some of the shine off the bull case for SoundHound stock. Plus, given its valuation, SoundHound doesn't look like a great buy at the current price, even if you think the upcoming financial report will be a total blockbuster. Therefore, it might be better to wait for a further pullback before investing in this story. Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $598,818!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $666,416!* Now, it's worth noting Stock Advisor's total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Nvidia. The Motley Fool recommends Stellantis and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Should You Buy SoundHound AI Stock Before May 8? This Recent Move by Nvidia Might Hold the Answer was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
14-03-2025
- Business
- Globe and Mail
Should You Buy SoundHound AI Stock After Its 64% Drop? This Recent Move by Nvidia Might Hold the Answer.
Nvidia (NASDAQ: NVDA) supplies the most powerful data center chips for developing artificial intelligence (AI) models. In fact, the company's valuation has soared by more than $2.2 trillion over the last two years because sales have been so strong. In late 2023, Nvidia started spreading some of its wealth by investing in a handful of smaller AI companies. One of them was SoundHound AI (NASDAQ: SOUN), which is a leading developer of conversational AI technologies. But when Nvidia released its latest form 13F detailing its stock holdings as of Dec. 31, SoundHound was notably missing. It turns out the chipmaker decided to sell its entire stake at the end of last year. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » SoundHound stock hit a new record high in December, but it has since plunged by more than 64%. Could this be a buying opportunity for investors, or is Nvidia's recent exit a sign to steer clear? Let's find out. A conversational AI specialist SoundHound AI is on a mission to embed conversational AI into daily life, allowing people to leverage the capabilities of intelligent software by using nothing more than their voice. Over 30% of the top 20 quick-service restaurants in the world are using SoundHound's technology, as are some of the biggest car manufacturers, from Hyundai to Stellantis (which owns Chrysler, Jeep, and Dodge). Restaurants use SoundHound to automate food ordering in-store, over the phone, and in the drive-thru, reducing the workload on human employees. The company also offers a tool called Employee Assist, which is a voice-activated virtual assistant capable of helping workers understand menu items and store policies to better serve their customers. SoundHound is already used in 10,000 locations from popular chains like Chipotle, Krispy Kreme, Papa John's, and, as of the fourth quarter of 2024, Burger King. On the automotive side, SoundHound's Chat AI assistant allows drivers to request information on a range of topics using their voice, whether they want to find the best local restaurants or know the status of their upcoming flight. Chat AI is a white-label solution that is highly customizable, so manufacturers can tweak its personality to suit their brand. It can even take on a different persona for a family car versus a sports car. In January, SoundHound also launched an in-vehicle commerce platform that allows drivers to place food orders while on the road, without picking up the phone. It syncs with the vehicle's GPS system to find the most suitable locations, so even if the driver is in an unfamiliar town, they can simply ask the assistant to order a pizza from the nearest Italian restaurant. SoundHound's conversational AI software is underpinned by its Polaris speech recognition model, which is 20% more accurate than equivalent models developed by Alphabet 's Google, and up to 36% more accurate than OpenAI's Whisper model. If the company can maintain that advantage, it will remain a go-to choice for more businesses that are looking to incorporate AI into their operations. SoundHound's revenue is soaring SoundHound had a record year in 2024, with revenue soaring 85% to $84.7 million. That growth rate marked a significant acceleration from 2023, when the company's revenue increased by just 47%. Thanks to the acquisition of another conversational AI company called Amelia in August last year, SoundHound also significantly diversified its revenue base. It was able to expand beyond restaurants and car manufacturers to enter new industries like financial services and healthcare. In fact, SoundHound's largest customer accounted for just 14% of its total revenue in 2024, down from more than half of its total revenue in 2023. On that note, the company ended the year with a whopping $1.2 billion order backlog, representing a 75% increase from the end of 2023. Management expects this backlog to convert into revenue over a period of six years, and since it's expanding so quickly, this could translate into significant future growth at the top line. SoundHound's guidance suggests it could generate up to $177 million in revenue during 2025, implying its growth rate could accelerate again to an eye-popping 109%. Unfortunately, there is one glaring issue investors need to be wary of: SoundHound is losing truckloads of money. Its generally accepted accounting principles (GAAP) net loss came in at $350.6 million in 2024, which was a staggering 294% increase from 2023. The loss was much smaller on a non-GAAP basis, which excludes one-off and noncash expenses like stock-based compensation, coming in at $69.1 million. However, with just $198 million in cash on hand at the end of last year, the company can't afford to keep burning through money at this pace for perpetuity. SoundHound stock isn't cheap, despite its sharp decline SoundHound stock might be down 64% from its all-time high, but it's still quite expensive. Based on last year's revenue and the company's market capitalization of $3.1 billion, the stock trades at a price-to-sales (P/S) ratio of 34.2. That is a substantial premium to a basket of other AI leaders, some of which are trillion-dollar giants with hundreds of billions of dollars in revenue, and track records of success that span decades. For example, it doesn't make much sense for SoundHound's P/S ratio to trade at a whopping 68% premium to Nvidia's P/S ratio, considering Nvidia is one of the highest-quality companies in the entire world: SOUN PS Ratio data by YCharts SoundHound's valuation looks a little more reasonable when calculated using its forecast 2025 revenue of $177 million, which places its stock at a forward P/S ratio at 17.9. However, that still tops Nvidia's forward P/S ratio of 12.7 by a wide margin. It's impossible to know whether valuation had any bearing on Nvidia's decision to sell its entire stake in SoundHound at the end of last year. After all, the chipmaker only held 1.73 million shares, which would be worth just $14.8 million at today's price. Even if it suffered a complete loss, it wouldn't have impacted the $2.6 trillion giant one bit. Nonetheless, SoundHound's valuation could be a real headwind that prevents further upside, so regular investors might want to think twice before buying in -- especially with Nvidia out of the picture. Should you invest $1,000 in SoundHound AI right now? Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $709,381!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of March 10, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Chipotle Mexican Grill, Microsoft, and Nvidia. The Motley Fool recommends Restaurant Brands International, and Stellantis and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short March 2025 $58 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Yahoo
06-02-2025
- Automotive
- Yahoo
SoundHound (SOUN) Expands AI in Cars with New Brand Personalities Feature
SoundHound AI (NASDAQ:SOUN) is rolling out Brand Personalities, a new customization feature for its Chat AI Automotive voice assistant, allowing carmakers to tailor how their in-car assistants sound. Warning! GuruFocus has detected 3 Warning Signs with SOUN. The company, a popular meme stock among retail traders, said the new tool lets automakers control the entire personality of their voice assistants, aiming to create a more relatable and engaging in-vehicle experience. This innovation goes beyond functionality. It is a fully customizable, deeply engaging experience that builds meaningful connections and long-term brand loyalty, said Michael Zagorsek, COO of SoundHound AI. The feature launch follows research showing that 77% of regular drivers would use generative AI voice capabilities in their vehicles if available. SOUN's Expanding Reach SoundHound's AI technology is already deployed in millions of vehicles across 20 car brands and 25+ languages, including Lucid Motors (NASDAQ:LCID) and several Stellantis (STLA) brands like Alfa Romeo, Citroen, Peugeot, Opel, and Vauxhall. In March 2024, SoundHound announced that Stellantis' DS Automobiles would be the first automaker to integrate generative AI into full-scale production with its Chat AI Automotive assistant. Currently, about 10 million SoundHound-enabled vehicles are on North American roads. From the chart below you can see the stock is up a whopping 264.1% This article first appeared on GuruFocus. Sign in to access your portfolio
