Nvidia, the AI and semiconductor giant, has made a surprising move by selling off its entire stake in SoundHound AI (SOUN), which has caused the stock price to plummet by 30%.
This decision has caught the attention of investors, leaving many wondering about the future of SoundHound and the AI stock market.
If you’re new to investing, don’t worry! We’re breaking this down in simple terms so you can understand what’s happening and what it might mean for you.
SoundHound AI Stock Video Overview
What Is SoundHound AI?
SoundHound AI specializes in voice AI technology, similar to how Apple’s Siri or Amazon’s Alexa work.
They help businesses integrate advanced voice recognition into their products, from cars to restaurants.
The company has been growing in the AI sector, which is booming thanks to advancements in artificial intelligence.
SoundHound’s Financial Health
Understanding a company’s financials can give insight into its stability and growth potential. Here’s a snapshot of SoundHound’s recent financial performance:
- Revenue Growth: In 2023, SoundHound reported revenues of $45.87 million, up from $31.13 million in 2022, showing a positive growth trend.
- Net Income: Despite growing revenues, the company reported a net loss of $88.94 million in 2023, which is slightly less than the $115.37 million loss in 2022.
- Recent Performance: In the third quarter of 2024, SoundHound’s revenue was $25.09 million, an 86.41% increase from the previous quarter, with a net loss of $21.75 million.
SoundHound’s Key Partnerships and Collaborations
SoundHound has established several significant partnerships to expand its voice AI technology:
- Automotive Industry: Collaborations with car manufacturers like Hyundai, Kia, and Lucid Motors have integrated SoundHound’s voice AI into vehicles, enhancing driver experiences.
- Hospitality Sector: Partnerships with fast-food chains, including White Castle and Torchy’s Tacos, have implemented voice AI in drive-thrus and phone orders, improving customer service.
- Healthcare Field: A recent collaboration with MUSC Health introduced an AI agent named Emily to streamline patient appointment management.
- Technology Alliances: Teaming up with companies like Perplexity has enhanced SoundHound’s AI capabilities, integrating advanced conversational AI into their voice assistant products.
Why Did Nvidia Sell Its SoundHound Shares?
Nvidia originally invested in SoundHound, believing in its potential as a leader in AI-driven voice technology.
However, the company recently decided to sell all its shares, making investors question whether this is a red flag on the SoundHound company itself.
Although Nvidia has not specified the reasons, it is important to note that Nvidia’s decision to sell its shares does not necessarily reflect negatively on SoundHound’s fundamentals.
Currently SoundHound and Nvidia are still in a collaborative partnership in AI innovation as announced in CES 2025.
Companies often adjust their investment portfolios based on strategic priorities, which may not directly relate to the performance or potential of the divested company. Here are a couple of reasons why Nvidia may have made this decision:
1. Profit-Taking: Nvidia might have sold its shares to lock in profits. AI stocks have seen massive gains, and Nvidia may have decided it was the right time to cash out.
2. Reallocation of Resources: Nvidia is heavily invested in AI but may be focusing on other areas with bigger growth potential, such as AI chips and data centers.
What Does This Mean for SoundHound?
SoundHound AI’s stock has taken a significant hit since Nvidia sold its stake in the company.
Previously, Nvidia’s investment had fueled excitement, driving a major price surge in 2024. However, with Nvidia now out, investors are questioning whether SoundHound can sustain its rapid growth.
Despite the decline, some analysts still believe the stock is overvalued.
The upcoming Q4 earnings report on February 27, 2025, will be crucial in determining the company’s trajectory.
Analysts expect strong revenue growth, particularly from non-automotive sectors.
Similar to other smaller AI companies, SoundHound remains unprofitable and faces growing competition in the AI voice automation market.
In fact, projections indicate a larger loss per share compared to the previous quarter.
The biggest risks for SoundHound include its high stock valuation, the potential for more investors selling their shares, and the challenge of maintaining growth while reducing losses.
Some experts argue that unless SoundHound delivers outstanding results in the coming months, the stock could continue to decline.
Should You Be Worried About SoundHound? 3 Things Investors Should Consider Before Buying Or Selling
If you’re already invested in SoundHound or considering it, here are some key takeaways:
- Do Your Research: Don’t panic just because Nvidia sold its shares. Look at SoundHound’s financials, partnerships, and future plans before making any decisions.
- Watch the Stock Price and Upcoming Earnings: Nvidia’s exit might cause temporary volatility, meaning prices could fluctuate quickly.
- Think Long-Term: AI is a growing industry, and SoundHound still has room to expand. Consider if you believe in the company’s vision before making any moves.
Technical Analysis on SoundHound
On the daily chart, the technical signals have turned bearish due to the recent plummet in stock price.
The future Ichimoku cloud has turned bearish, and the recent candlestick is below the cloud, signaling potential downward momentum.
Investors who have done their research and see SoundHound as a buying opportunity, here are some key buy levels to consider:
- Current Market price: $10.97
- $8.74
- $6.39
- $4.39
If the stock holds above these levels, there may be a chance for a rebound. However, if it continues to decline, it could indicate further downside risk.
Remember: Investing is personal, and what is right for me might not be right for you. Always do your own due diligence. You should ONLY invest based on your own risk tolerance and your timeframe for reaching your portfolio goals.
Final Thoughts on Nvidia Dumping SoundHound Shares
Nvidia selling its SoundHound shares is big news, but it doesn’t necessarily mean the company is doomed.
Investors should stay informed, think critically, make decisions based on solid research rather than headlines alone and ensure that it is aligned with their risk tolerance, strategy and investment goals.
AI is a fast-moving space, and this could be just one step in a much bigger picture.
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If you enjoyed my blog post about SoundHound AI Stock, you’ll love my post on ‘Micron Technology Stock News‘
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