INVISTA has invested in SoundHound AI stock - should you?

This year, inINVISTA ( NASDAQ. NVDA)Disclosure of purchase ofSoundHound AI (NASDAQ. SOUNThe company's stock price has soared since the company took over the shares of TP3T, a chip giant with a relatively small investment of nearly $3.7 million. The chip giant's investment is relatively small, with nearly $3.7 million in shares of the company at 0.6%. The investment is one of five Nvidia investments in artificial intelligence (AI)-related tech companies in the fourth quarter of 2023.

So what exactly does SoundHound AI do, and should investors follow Nvidia's lead and invest in the company's stock?

Gaining a foothold in the field of Voice Artificial Intelligence.

SoundHound AI was not well known before the news of Nvidia's investment in the company came to light. However, the company has relationships with many major automotive companies that use its technology to power their voice assistant technology. The company's platform is integrated into devices such as automobiles, and its AI technology helps voice assistants interact with users in a more natural and conversational way.

SoundHound AI's platform, called Houndify, accomplishes this in two ways. First, it uses speech-to-meaning technology to process speech in real time so that the device understands its meaning even before the user finishes speaking. Second, it uses Deep Meaning Understanding to help understand the user's intent and to answer questions about car racing.

An example of this technology is that where the user gives a series of variables (e.g., location, price range, amenities, and star rating), the voice assistant is able to give a hotel recommendation.

Progress in the automotive and fast food restaurant verticals

SoundHound AI made its greatest strides in sales to the automotive industry. The company has car name relationships with more than 20 automotive brands, including Honda, Jeep, Hyundai, Fiat, Resonance Lexus and RAM. In its fourth-quarter earnings release, the company said it won a deal with a leading U.S. electric car maker and signed another deal with a major automaker to significantly increase its unit production through 2037.

The company has also made great strides in the fast food restaurant space. Its SoundHound for Restaurants voice assistant can take phone orders so employees don't have to answer the phone and can focus on helping customers. The company also offers solutions for drive-thrus and kiosks.

The company has entered into an agreement withToast respond in singingOlo and other restaurant-focused fintech companies, as well as fast-food chains such as White Castle and Jersey Mike's, have signed deals.

SoundHound AI's strengths in the automotive and food and beverage verticals led to a 47% increase in revenue to $45.9 million in 2023. Meanwhile, the company forecasts 2024 revenue to be in the range of $63 million to $77 million, with a median growth of nearly 531 TP3T. the company said it expects 2025 revenue to exceed $100 million.

While this is solid growth, SoundHound AI's $661 million cumulative subscription and booking backlog is even more interesting. This metric represents the potential revenue the company expects to generate over the term of the signed carpet. Currently, the average term of its carrier backlog is six and a half years, so the majority of revenue from these carriers should be recognized by the end of 2031, although some carriers have longer terms.

speculative investment

It's easy to see why Nvidia likes SoundHound, given the company's rapid growth and large revenue backlog. And it's not hard to imagine that SoundHound AI's technology could be applied to other industries as well, which would accelerate its growth.

The companies also recently announced a郃 that will allow SoundHound AI to leverage Nvidia's DRIVE platform to deliver voice-on-a-chip AI without the need for an Internet connection. The solution will allow users to access SoundHound AI's Vehicle Intelligence product, which allows users to ask car-specific questions, such as what it means when the dashboard rock light comes on, as well as general questions, such as finding the best restaurant in the neighborhood.

That said, SoundHound stock trades at a price-to-sales ratio of more than 26 times, and the company is currently unprofitable, so the stock is extremely speculative at the moment. The company's technology looks impressive, but artificial intelligence technology is evolving rapidly. What looks like 耑 technology today could become a commodity in the future. While the company's cumulative backlog is impressive, it is only about $100 million per year over the average lifespan of a person, so the company's current valuation has a long way to go.

So if investors want to follow Nvidia's lead in investing in SoundHound AI stock, I suggest they keep their positions small, just as they would invest in Nvidia itself.

Should you invest $1,000 in SoundHound AI right now?

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Geoffrey Seiler owns shares of Toast. the Motley Fool holds recommendations for Nvidia, Olo and Toast. the Motley Fool recommends Stellantis. the Motley Fool has a disclosure policy.

Nvidia invested in SoundHound AI stock, but should you?The Motley Fool originally posted this article.