SoundHound AI has been red-hot on the stock market in 2024, with stunning gains of 288% so far. Investors have been buying shares of this voice artificial intelligence (AI) solutions provider hand over fist based on the belief that it could become the next big AI play.
The company’s revenue has been growing at an impressive pace, and it also boasts of a solid pipeline that could help it sustain its red-hot growth in the future. What’s more, SoundHound AI stock has got a vote of confidence from AI pioneer Nvidia (NASDAQ: NVDA), which has a small stake in the company. This is a big reason why shares of SoundHound have simply taken off in the past month or so.
However, investors looking to buy an AI stock right now may not be comfortable paying 42 times sales for SoundHound, which is way higher than the tech sector’s average of 7.1. Of course, it may become a key player in the AI market in the long run, but SoundHound AI is currently quite small, and is far from being profitable. Instead, investors would do well to buy shares of the following two established AI companies, which appear to be undervalued.
1. Nvidia
You may be wondering how Nvidia is an undervalued AI stock — it is trading at 36 times sales, which isn’t very cheap when compared to SoundHound. But a closer look at how fast Nvidia has been growing will make it clear that investors are indeed getting a good deal on the stock right now.
Nvidia’s revenue in the fourth quarter of fiscal 2024 (for the three months ended Jan. 28, 2024) jumped a whopping 265% year over year. Its adjusted earnings grew at a faster pace of 486% year over year to $5.16 per share. For comparison, SoundHound AI’s revenue was up 80% year over year in the previous quarter to $17.1 million, while its adjusted loss halved on a year-over-year basis to $0.07 per share.
What’s even more impressive about Nvidia is that the chipmaker’s outstanding growth is probably here to stay. Its revenue guidance of $24 billion for the first quarter of fiscal 2025 means that Nvidia’s revenue is on track to more than triple once again from the year-ago…
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