Will 2025 be the year that the king of artificial intelligence (AI) is dethroned?Certainly, semiconductor manufacturing giant Nvidia (NVDA 3.10%) It is unlikely that you will go to a dungeon. But with a market capitalization already exceeding $3.3 trillion, some investors may wonder if Nvidia’s growth rate will slow this year.
For growth stock investors, that may be the most important question. If so, what emerging AI companies will be good choices for aggressive investment in 2025? One obvious place to look is Nvidia’s own investments. Probably inside a company. SoundHound AI (Thorn -2.36%) is one such company, whose stock price soared last year. After the recent sharp decline, investors may be wondering whether now is a good time to buy shares in this maker of voice recognition AI technology solutions.
Parabolic growth doesn’t last forever
Nvidia has achieved not only potential and promise, but also its huge market capitalization valuation. Revenues and earnings per share have skyrocketed over the past three years, and the share price has kept pace.
NVDA data by YCharts.
Demand remains strong for Nvidia’s advanced chips and architectures for building and training large-scale language models (LLMs) and other AI applications. The company has announced that it will introduce new graphics processing unit (GPU) chips at a rate of once a year. The company’s backlog is full of orders for new Blackwell chips, even as it continues to meet demand for GPUs made with the previous Hopper architecture.
Revenue growth is expected to continue as hyperscalers build more data centers and Nvidia’s next-generation Rubin AI chip architecture is scheduled to be released next year. However, the pace of revenue growth in Nvidia’s data center division has already slowed significantly year over year.
Quarterly Data Center Segment Revenue Growth Rate (QOQ) Growth Rate (YOY) Q4 FY2023 $3.62 billion (5.7%) 10.8% Q1 FY2024 $4.28 billion 18.5% 16.6% Q2 FY2024 $10.32 billion 141 % 171% Q3 2024 $14.51 billion 40.6% 279% 4th quarter of 2024 $18.4 billion 26.8% 409% 1st quarter of 2025 $22.56 billion 22.6% 427% 2nd quarter of 2025 $26.27 billion 16.4% 154% 3rd quarter of 2025 30.77 billion dollar 17.1% 112%
Data source: Nvidia. Graph by author. Note: The fourth quarter of fiscal year 2023 ended on January 29, 2023. This was the first quarter after OpenAI’s ChatGPT announcement. The third quarter of fiscal year 2025 ended October 27, 2024 and is the most recent data available.
That’s not to say there aren’t new opportunities for Nvidia to re-accelerate its revenue growth, but aggressive investors may want to keep an eye on other AI stocks as well.
A budding business can grow faster
In the final quarter of calendar year 2023, Nvidia purchased 1.73 million shares of SoundHound AI stock, valued at approximately $3.6 million at the time. So far, it’s proven to be a good investment. SoundHound AI stock is up more than 650% over last year, even after plummeting more than 40% since Christmas.
There is optimism as SoundHound expands its market potential. What started with voice technology applications in customer service areas such as restaurants has expanded to other areas, such as the automotive use case for voice-generating AI that brings cloud-based LLM to vehicles.
Most recently, SoundHound announced that it will supply a new hands-free voice assistant for electric vehicle (EV) manufacturer Lucid’s luxury vehicles. Management saw rapid sales growth that increased its 2024 revenue outlook by nearly 20% in just six months between the first and third quarter reports. The company’s 2025 outlook is for sales to double to $165 million at the midpoint of its guidance range.
Companies that have doubled their sales year-over-year should be of interest to investors. But startups like SoundHound AI also come with higher risks. It remains unprofitable, and its cash position has fallen from $226 million as of March 31 to $136 million as of September 30.
Is it worth the additional risk?
In my opinion, this increased risk tips the balance of investment decisions in favor of Nvidia. SoundHound AI could be a worthwhile investment from here, but Nvidia still has a chance.
Nvidia is still growing sales and profits. In addition to continuing to roll out innovative GPU products, there are also robotics and automotive segments that have not yet contributed significantly to revenue. But self-driving cars and robots designed to increase efficiency in many industries could become mainstream in the coming years.
These prospects provide NVIDIA investors with further growth opportunities and help make NVIDIA a better investment, even at its current stage and valuation.
Howard Smith holds positions at Lucid Group and Nvidia. The Motley Fool has a position in and recommends Nvidia. The Motley Fool has a disclosure policy.
