Undoubtedly, artificial intelligence (AI) will be the most promising growth opportunity of this decade. While AI stocks are abundant in the market, the most promising companies have already gained significant investor attention. However, there's one stock trading at just $12 that seems to have escaped the notice of most AI investors. Its growth potential should not be underestimated, but investors must be aware of one key risk factor before entering.
**The AI Target Once Favored by NVIDIA**
In 2023, when NVIDIA (NVDA.US) disclosed its $3.7 million investment in SoundHound AI (SOUN.US), the company instantly ignited Wall Street's imagination. At that time, NVIDIA was broadly investing in a series of AI companies through small investments to accelerate development in the AI sector. Subsequently, NVIDIA established formal partnerships with many of its portfolio companies.
For example, it collaborated with SoundHound to develop in-vehicle AI platforms, combining NVIDIA's technical expertise in GPUs and software architecture with SoundHound's voice assistant technology to create unprecedented in-car interactive experiences, enabling drivers to communicate with their vehicles in more natural ways.
In 2024, NVIDIA sold its SoundHound shares at a considerable profit. During its approximately one-year holding period, NVIDIA's "star effect" helped propel SoundHound's stock price from $5 all the way to $25. Since NVIDIA's exit, the stock has retreated to around $12, but remains well above pre-investment valuation levels.
Now, with the stock down 50% from its peak, should investors reconsider this former "AI darling"? Although NVIDIA no longer holds shares, their previous collaboration not only brought SoundHound into the public eye but also provided crucial market validation for this relatively smaller company. So, can SoundHound become the next rising star in the AI field?
**Conversational AI Technology**
SoundHound focuses on applying AI technology to the audio domain. The company has partnered with multiple mainstream automakers to develop in-vehicle voice assistants, collaborated with national fast-food chains to launch automated ordering systems, and created customer service AI chatbots for countless businesses. Wherever AI voice can replace human voice, SoundHound has a presence.
Within the broader AI industry, this niche market still offers considerable scale. The global voice AI market is estimated to grow from approximately $2 billion in 2024 to over $47 billion by 2034, representing an annual compound growth rate exceeding 30%.
SoundHound's growth performance shows the company is actively capitalizing on this fundamental opportunity: its sales grew 47% year-over-year in 2023, with growth accelerating to 85% in 2024. Analysts expect this year's sales growth to reach 96% (though 2026 growth may moderate to 29%).
**Concerns Behind the Opportunity**
Despite a current price-to-sales ratio of 36.3x, the market clearly recognizes SoundHound's potential to maintain high growth for years or even decades to come. However, the company's real challenge isn't insufficient market growth, but intense industry competition.
Nearly all tech giants are developing their own voice AI technologies. Can SoundHound's annual R&D budget of $90 million support its long-term competitiveness? Whether the company possesses sustainable competitive advantages against better-funded rivals remains difficult to determine.
Can SoundHound become the next dark horse in the AI world? The answer is undoubtedly yes. But its success will depend on long-term competitiveness, not market opportunity itself.