Shares of SoundHound AI (SOUN 2.28%) took off like a shot this morning, soaring as much as 79.6%. As of 11:42 a.m. ET on Thursday, the stock was still up 48.9%.
The catalyst that drove the artificial intelligence (AI) specialist higher was the revelation that one of the biggest names in technology had taken a stake in the company.
NASDAQ: SOUN
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A big vote of confidence
In a regulatory filing that dropped after the market close on Wednesday, chipmaker Nvidia revealed that it had taken a position in SoundHound AI, which provides voice- and audio-recognition software and solutions to businesses.
In its quarterly required 13F, a form filed with the Securities and Exchange Commission (SEC) that discloses holdings of other publicly traded companies, Nvidia divulged that it had acquired 1.73 million shares of SoundHound AI Class A stock, worth roughly $3.9 million as of yesterday's market close. To be clear, while that might sound like a lot, it amounts to less than 1% of SoundHound's roughly 247 million shares outstanding.
It does, however, represent a significant vote of confidence in the company. SoundHound AI has developed cutting-edge voice recognition software focused on the entertainment, restaurant, and automotive industries.
For example, SoundHound's generative AI solutions offer voice-ordering capabilities for phone orders, self-serve kiosks, and drive-thrus -- at a time when restaurants are struggling to hire enough employees to staff their locations.
The AI gold rush has only just begun
While this is likely the first time Nvidia has been required to disclose its holdings, reports suggest it has been keeping an eye on SoundHound AI going all the way back to 2017, participating in an early $75 million funding round in the then start-up.
SoundHound currently provides voice solutions to a number of automotive brands, representing 25% of all autos with voice controls produced globally, or roughly 20 million units. Furthermore, the company is expanding into a variety of other industries, including financial, healthcare, retail, and more.
At 19 times sales, the stock isn't cheap. And the company isn't yet profitable, so there's a fair degree of risk. That said, for investors with the stomach for some volatility, a little bit of SoundHound AI stock could go a long way.
