When tech giant Nvidia disclosed its investments in a recent filing, it sent shares of tech stocks Arm Holdings and SoundHound AI (SOUN 5.77%) soaring. Year to date, both of these stocks are up over 80%, which is even better than Nvidia's gains thus far.

Not all of Nvidia's investments achieved such sudden spikes in value. But with both SoundHound and Arm being key players in artificial intelligence (AI), investors may view Nvidia's investments in the two businesses as votes of confidence in their potential roles in the AI revolution.

While Arm was already fairly well known in the tech world, SoundHound was more of an unknown. And with a market cap of less than $2 billion, it might have more potential to rise higher in value. Could the stock be a better buy than Nvidia right now?

SoundHound generated 80% revenue growth in Q4

As with Nvidia, what might attract investors to SoundHound is that this is also an AI company experiencing some terrific growth. In its most recent quarterly results, which covered the last three months of 2023, SoundHound reported 80% revenue growth, with its top line hitting $17.1 million. And while it remains unprofitable, losses are shrinking -- SoundHound's net loss of $18 million was less than the $30.9 million loss it reported in the prior-year period.

By the end of 2025, SoundHound expects its top line to exceed $100 million, which is more than double the $45.9 million it reported for all of 2023. It also expects to be profitable on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In 2023, SoundHound's adjusted EBITDA loss was $35.9 million.

With a key investor such as Nvidia behind the business, this may not be as risky a stock as it otherwise would be. And that's important, given the massive growth opportunities SoundHound can pursue.

SoundHound has enormous potential

The near-term opportunities for SoundHound are promising, but in the long run, there may be much more room for the business to get even bigger. The company provides voice AI solutions which, through its Dynamic Interaction interface, are used to take orders in drive-thrus. It also has opportunities within other industries, including automotive, where it can help take directions from drivers and respond to questions.

The company believes its total addressable market is worth more than $160 billion, and with significant barriers to entry, Soundhound has a big competitive advantage over potential rivals. Its AI platform is also available in 25 languages.

Should you invest in SoundHound stock?

SoundHound's business is still in its early growth stages, and it has a lot to prove. Nvidia has invested in the business, but investors shouldn't assume it will provide a safety net.

But given the company's strong growth prospects, the many potential applications for its voice platform, and the many restaurants using it, including White Castle and Krispy Kreme, there are a lot of reasons to remain bullish on the company's long-term prospects.

If you are willing to take on some risk and invest in this modestly sized stock, SoundHound could be one of the better AI investments to load up on right now. It does have the potential to outperform Nvidia, but SoundHound will need to deliver strong results to do so, and while it is growing, the danger is that investors may end up expecting too much too quickly from this stock. And that's why it may still not be a slam dunk to outperform Nvidia this year, even with its strong head start. Volatile stocks like this can quickly give back gains if investors become pessimistic.

However, as long as you are patient and willing to temper your expectations for the AI stock, SoundHound could be a good buy for the long haul.