Nvidia (NVDA 1.28%) was a $360 billion company at the beginning of 2023, but its value accelerated to a whopping $3.3 trillion just two years later. A key driver of the company’s phenomenal growth is Nvidia’s data center graphics processors (GPUs), which are the world’s best at developing artificial intelligence (AI) models.
AI has been a major driver of growth for the company, and Nvidia is exploring ways to ensure AI continues to drive growth. To help with this, over the past year or so, CEO Jensen Huang has been diversifying some of Nvidia’s wealth by investing in other AI stocks.
Image source: Nvidia.
6 stocks owned by Nvidia
Nvidia first started investing in AI stocks at the end of 2023. According to the company’s most recent 13-F filing with the Securities and Exchange Commission (SEC) in November 2024, it currently holds six holdings:
Applied Digital Corp. designs and builds data centers for its customers. Arm Holdings helps tech companies design advanced computing chips. Nano-X Imaging uses AI to improve medical images. Recursion Pharmaceuticals uses AI to aid the drug discovery process. Serve Robotics develops autonomous last-mile delivery solutions. Soundhound AI (Thorn 10.61%)a leader in conversational AI.
SoundHound AI stock was the top performer on that list in 2024, posting a massive 835% gain. However, 2025 got off to a very difficult start. The company’s price fell 32% last week (ending Friday, January 10) as investors reduced their bets on high-valuation stocks.
Could this be the ultimate opportunity to buy SoundHound stock?
Conversational AI powerhouse
Conversational AI is designed to understand voice-based prompts and respond appropriately. SoundHound is a leading developer of this technology and currently has customers in the quick service restaurant industry, hospitality industry, and even the automotive industry.
However, SoundHound acquired another conversational AI company called Amelia last year, and the company is expanding into new industries such as financial services, insurance, and healthcare, making it a real force in this emerging space. .
SoundHound’s applications are running in more than 10,000 restaurants, automating drive-thru, phone, and in-store orders. Additionally, the company is increasingly adopting its Employee Assist software, which provides prompt and prompt information to employees about menu items and store policies. This is basically a virtual assistant that you can talk to at any time during your shift.
Chipotle Mexican Grill, White Castle, Applebee’s, and Panda Express are just a few of the top restaurant chains using SoundHound’s technology.
SoundHound’s Chat AI software is also featured in several new vehicles from major manufacturers including Stellantis (Chrysler, Jeep, Dodge), Mercedes-Benz, and Hyundai. It’s a powerful voice assistant that can provide drivers with information on everything from the weather to sports scores.
At the CES 2025 technology conference in early January, SoundHound also announced the world’s first in-vehicle voice commerce platform. Drivers can ask a voice assistant to order takeout from a local restaurant without making a phone call. It also syncs with your car’s GPS navigation system, so if you’re hungry after work, your meal will be ready the moment you arrive at the restaurant and pick it up.
SoundHound’s revenue is expected to soar in 2025
SoundHound has not yet reported financial results for the final quarter of 2024. However, according to the company’s guidance, total annual revenue could reach up to $85 million. This corresponds to an 85% growth compared to 2023, which is also the highest on record.
The inclusion of Amelia’s earnings in 2024 is the main reason for the strong growth. Additionally, in the third quarter (ending September 30), SoundHound told investors that five different industries accounted for 90% of its revenue, compared to 5% to 25% of its total revenue in the same period last year. said that it is from the automotive sector. Alone. This highlights how much the Amelia acquisition helped SoundHound diversify its business.
2025 could be SoundHound’s biggest year yet. Before operations began, the company told investors it could generate up to $175 million in revenue. This represents an accelerated growth of 105% compared to 2024. SoundHound also ended the third quarter with a record backlog worth $1 billion. It will turn into revenue over the next 6 years. In other words, the company has a huge demand pipeline that should support growth well into 2025 and beyond.
SoundHound stock fell sharply last week, but should you buy the stock?
SoundHound’s stock price recently reached an all-time high of approximately $24.23, valuing the company at $9 billion. Based on the past 12 months of earnings, the stock was trading at a staggering price-to-sales (P/S) ratio of over 100, which was completely unsustainable.
Even after falling 32% last week, SoundHound’s P/S ratio is still around 64, which is more than double Nvidia’s P/S ratio.
Data by YCharts.
Nvidia is one of the highest quality companies in the world, with strong revenue growth, soaring profits, a leadership position in AI hardware, and a decades-long track record of success. It doesn’t make much sense for SoundHound stock to trade at such a large premium (or any premium at all) to Nvidia stock.
Even if you measure the P/S ratio on a forward-looking basis using SoundHound’s 2025 sales forecast of $175 million, its P/S ratio is still around 30. By comparison, Nvidia’s forward P/S ratio is just 17, so I think SoundHound stock is expensive. Still too expensive.
I’m not saying SoundHound stock needs to fall further. The stock is likely to trade sideways over the next few months until investors learn more about its earnings outlook for 2025 and even 2026. However, it is very difficult to recommend buying the stock at its current price, as using the best AI it will definitely be overvalued. Benchmark global stock prices.
