The amount of applications surrounding artificial intelligence (AI) is astounding. Breakthroughs in generative AI are fueling advancements in accelerated computing, data analytics, healthcare, and more.
One area that is quietly emerging as a lucrative growth opportunity in AI is voice-recognition software. Believe it or not, many of the world's largest businesses are investing heavily in this technology.
Let's break down why AI-powered voice applications are on the rise, and assess which opportunities may be best-suited for investors.
Speech recognition is an enormous opportunity
Did you know that Apple, Amazon, Alphabet, and Nvidia all have footprints in the voice-recognition software market?
Apple is the owner of smart assistant Siri as well as music-streaming app Shazam. Moreover, both Amazon and Alphabet have explored how voice-powered AI can integrate with the Internet of Things. Specifically, smart home applications such as Amazon's Alexa devices and Google Home products leverage speech-recognition capabilities.
But perhaps the splashiest move in this area of the AI realm hails from Nvidia. Earlier this year Nvidia took the spotlight in the AI voice market after it revealed that it held a small stake in SoundHound AI (SOUN 5.00%).
After its relationship with Nvidia became public knowledge, shares of SoundHound AI rocketed by as much as 320%. While trading activity has cooled off a bit, SoundHound AI stock is still up a whopping 140% so far this year.
According to research from Statista, the market for voice-recognition technology is expected to grow at a 23.7% compound annual growth rate (CAGR), reaching roughly $50 billion by 2029 -- up from about $18 billion today.
Considering the multitude of applications for voice-powered AI and the market's enormous size, it's not surprising to see so many big tech enterprises pursuing it. While SoundHound AI has taken the spotlight in voice-recognition software, another big tech giant may be on its heels.
Image Source: Getty Images.
Is OpenAI coming for SoundHound?
In 2022, Microsoft shelled out nearly $20 billion to acquire speech recognition company Nuance. This deal made a lot of sense as Microsoft could integrate Nuance features across its operating system -- from the cloud to productivity tools.
The Windows developer bolstered this move last year following a multibillion investment in OpenAI -- the developer of ChatGPT. Since partnering with OpenAI, Microsoft has swiftly implemented ChatGPT across its operating system.
While this move has mostly augmented Microsoft's Azure cloud platform, new developments from OpenAI could indicate that it has its eyes on further penetrating AI-powered voice services.
Until now, ChatGPT was best known for assisting with a host of tasks from writing essays to generating custom art to writing software code. But the company's latest breakthrough may have just put SoundHound AI in check.
In late March, OpenAI announced on its blog that it had developed a product called Voice Engine. Some of the applications for Voice Engine include facilitating reading assistance, translating videos and podcasts, and even helping in clinical settings.
Before counting SoundHound AI totally out, there is an important detail to note regarding Voice Engine. For now, OpenAI has chosen "to preview but not widely release this technology at this time."
The company cites several ways that Voice Engine could be misused as its rationale to hold off on broad commercialization.
Keep your eyes on Microsoft
Considering the progress Microsoft has made in other areas of artificial intelligence (AI), I see Voice Engine as a potential catalyst for the company at the appropriate time. While Voice Engine may not be fully integrated into Microsoft's ecosystem at the moment, I surmise OpenAI will eventually roll out the product at scale.
The big themes here are that voice-recognition products are on the rise, and Microsoft's investment in OpenAI has proven to be a savvy move so far. While SoundHound AI has garnered significant interest this year, the stock remains a speculative investment.
SoundHound AI is still quite small, and it's nowhere close to profitable. Furthermore, with so many alternative platforms available and some Wall Street bears raising doubts about SoundHound AI's products, it's hard to make sense of the company's ability to compete with large-scale players in the long run.
On the other hand, Microsoft appears to be a much better bet on the overall AI narrative than many of its peers, and I suspect that the company will remain well positioned to make headway in the AI-powered speech market in one way or another.
