Investors Eye SoundHound AI Amid AI Boom and Nvidia Comparisons

Growth investors are exploring SoundHound AI for potential amid AI advancements. With the AI market booming, SoundHound offers investment allure, despite comparisons with Nvidia suggesting limited growth potential.

Date: 14-04-2025

AI Rating: 6

Explosive Growth in AI Spending
The ongoing surge in AI spending is a critical trend that impacts companies engaged in technological advancements. The global spending on AI infrastructure skyrocketed by 97% in the first half of 2024 and is projected to exceed $200 billion by 2028. While SoundHound AI is not a hardware provider like Nvidia, it stands to benefit through increased demand for its AI services, which focuses on conversational AI and customer interaction technologies.

Market Potential
Currently, SoundHound commands a modest 6% share of the estimated $14.6 billion global conversational AI market, which is forecasted to more than double by 2029. With a solid pipeline comprising notable pilot programs, the company appears well-positioned to capitalize on the market's expansion.

Sales Growth Expectations
Analysts predict that SoundHound’s sales will surge by 96% in 2025 and 29% in 2026. This expectation correlates with the broader growth trends in the AI sector. However, challenges remain, particularly concerning SoundHound's high valuation at 33 times sales, which may factor in much of the anticipated growth.

Investment Considerations
Given SoundHound’s niche focus compared to Nvidia's broader market engagement, questions exist about its ability to achieve a similar scale of returns. Its current gross revenue of $84 million may indicate strong growth, but the price-to-sales ratio suggests that much of this potential upside is already reflected in the stock price.

Conclusion
While SoundHound AI does present appealing growth opportunities, particularly in a booming sector like AI, prospective investors must weigh its price competitiveness and growth potential. For cautious investors, considering more established companies like Nvidia may be favorable.

Stocks: SOUN NVDA