Nvidia (NASDAQ:NVDA) is clearly one of the top performers on the market in recent years. The chip design company has soared 2,600% over the past five years, and the stock is on track for a 148% gain this year. What is the reason for this momentum? Not only does Nvidia dominate the artificial intelligence (AI) chip market with an 80% share, it is also building an AI empire. The company offers a wide range of products and services, from enterprise software to networking solutions, to meet the needs of all AI customers.
All of this led to significant profit growth, with triple-digit sales and profit increases every quarter and margins above 70%. There’s also reason to be optimistic that Nvidia can maintain this performance, as it focuses on innovation and promises to update its chips once a year.
So Nvidia definitely has more gas in the tank to reap the benefits of power distribution. But despite all this, another AI stock has outperformed Nvidia in terms of performance this year. If this trend continues, this stock could be the biggest winner of 2024. Let’s take a closer look at this high-growth AI stock that could outperform market star Nvidia this year.
AI voice assistant expert
Rather than competing with Nvidia, this player operates in a different but promising area of AI: AI-driven conversational voice assistants. We’re talking about SoundHound AI. (NASDAQ: SOUN). The company stands out thanks to its unique speech-to-meaning technology. The platform understands speech on the fly, without first converting it to text. This results in faster, higher quality results and gives users the feeling of having a natural conversation.
SoundHound’s expertise is also protected by a robust patent portfolio of approximately 155 acquired and 115 pending.
SoundHound has already conquered various markets including automotive, restaurants, and customer service. For example, consider ordering food or communicating with your car. The company aims to expand into areas such as financial services and healthcare. All of this represents a total addressable market of $140 billion.
Speaking of healthcare, SoundHound recently made an acquisition, acquiring conversational AI player Amelia. This should increase its reach in healthcare and other markets.
In fact, SoundHound says the acquisition “significantly” increases its addressable market, with the combined company now having 200 “strong” customers. A few weeks after the acquisition, SoundHound provided expansion news, saying MUSC Health introduced the Amelia tool to help patients manage their appointments 24/7.
the story continues
SoundHound is focused on growth
How does this translate into earnings? Sure, SoundHound isn’t profitable yet, but that’s not surprising for a company at this stage of its growth story. Now is the time to spend significant time on research and development (R&D) to secure market leadership and marketing to expand your customer base. Both of these metrics are on the rise, with research and development up 34% year-over-year and marketing spend up 11% in the most recent quarter.
Other indicators also look very promising. For example, quarterly revenue increased 54% to $13.5 million, and cumulative subscription and reservation balances doubled year-over-year to $723 million. SoundHound is also receiving more inquiries about its services, indicating that it is attracting the attention of potential customers. Currently, the annual execution rate has reached 5 billion queries.
The AI voice giant also has a strong cash position of over $200 million and is making progress on paying down its debt. This shows that the company has the financial structure to support growth.
Now, let’s get back to stock performance. Currently, SoundHound is on track for 121% growth this year, still behind Nvidia, but not by much. SoundHound could take a step forward if the AI chip giant’s stock stagnates or declines a bit, and SoundHound gains more momentum, perhaps based on additional contract wins or other positive news.
Considering their historical earnings and share price performance, both companies are likely to perform well this year and are close to the finish line. But the year isn’t over yet. And SoundHound may have what it takes to be crowned the biggest winner in 2024.
Should you invest $1,000 in SoundHound AI right now?
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Adria Cimino has no position in any stocks mentioned. The Motley Fool has a position in and recommends Nvidia. The Motley Fool has a disclosure policy.
This Artificial Intelligence (AI) Stock Could Be the Biggest Gainer of 2024 (Hint: It’s Not Nvidia) was originally published by The Motley Fool.
