The euphoria surrounding artificial intelligence (AI) played a major in the Nasdaq Composite's 43% return last year. Indeed, investor enthusiasm for AI has carried over into 2024 -- helping fuel the S&P 500 to record levels.
While each member of the "Magnificent Seven" is playing a role in AI development, several companies in this cohort also share a more specific interest in voice-recognition software. Let's break down the various moves megacap tech has made in speech-powered AI assistants, and assess one stock in particular that could be set for liftoff.
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50 billion reasons to pay attention to voice-recognition technology
Whether you realize it or not, you probably interact with voice-based assistants almost every day.
Apple acquired AI-assistant Siri back in 2010 and has since integrated the technology across its ecosystem of hardware devices. More recently, Cupertino bought the music recognition app Shazam for $400 million.
Both Alphabet and Amazon have also shown a keen interest in voice-recognition applications, as each company's smart home appliances leverage this technology. Moreover, Microsoft acquired conversational AI tool Nuance a couple of years ago for $20 billion -- the third-largest acquisition in the software giant's history.
But most recently, semiconductor manufacturer Nvidia revealed that it has built a small stake in voice-recognition software developer SoundHound AI (SOUN 5.77%). Following the news of Nvidia's investment, SoundHound AI stock rocketed higher -- the stock gained 347% in the month of February.
I find this deal with Nvidia particularly delightful because in early January, I predicted that SoundHound AI may be a stock to keep your eyes on in 2024. My thesis primarily hinged on two ideas: voice-based software tools could become increasingly popular as use cases for AI continue to evolve, since voice controls can make AI tools easier to use. Furthermore, the market's appetite for acquisitions could rise this year.
Since SoundHound AI's trailing-12-month revenue is only $46 million, the company is still quite small. But with cumulative subscriptions and bookings backlog of $661 million, it's clear that the demand for voice-powered AI is rising -- and it's not all coming from big tech.
Considering that industry research sees the market for voice-recognition technology reaching $50 billion by the end of the decade, it appears to be early innings for SoundHound AI. While the stock has some momentum pushing it higher right now, this little-known AI company could emerge as a big winner in the long run.
