Shares of SoundHound AI (NASDAQ: SOUN) have soared this year after Nvidia (NASDAQ: NVDA) revealed that it had bought shares in the company. The chip giant made a relatively small investment, spending nearly $3.7 million to take a 0.6% stake in the company. The investment was one of five that Nvidia made in tech companies related to artificial intelligence (AI) in the fourth quarter of 2023.
So what exactly does SoundHound AI do, and should investors follow in Nvidia’s footsteps and invest in the stock?
Carving a niche in voice AI
Before Nvidia’s investment in the company came to light, SoundHound AI was not exactly well-known. However, the company has relationships with a number of large automobile companies that use its technology to help power their voice assistant technologies. The company’s platform is incorporated into devices, such as automobiles, and its AI technology helps voice assistants interact with users in a more natural and conversational manner.
SoundHound AI’s platform, which it calls Houndify, achieves this in two primary ways. First, it uses speech-to-meaning technology, which processes speech in real-time so the device understands its meaning even before the user is done talking. Next, it uses deep-meaning-understanding technology to help understand a user’s intent and answer complex questions.
An example of its technology at work would be a voice assistant that is able to give hotel recommendations when given a list of variables, such as location, price ranges, amenities, and star ratings.
Image source: Getty Images.
Making progress in the automobile and quick-service restaurant verticals
The area in which SoundHound AI has made the most progress selling into is the automotive industry. The company has relationships with over 20 auto brands, including Honda, Jeep, Hyundai, Fiat, Chrysler, and RAM, among others. In conjunction with its fourth-quarter earnings report, it said it won a deal with a prominent U.S.-based EV maker and signed another contract with a large automaker to significantly increase its unit volumes through 2037.
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