Artificial intelligence (AI) has taken the world by storm during the past year and a half. Breakthroughs in AI are leading to sweeping changes in accelerated computing, healthcare, e-commerce, and more. It seems like the possibilities are endless, and the technology is destined to disrupt more and more areas of everyday life.
One application in the AI realm that is often overlooked is voice-recognition technology. But believe it or not, you interact with this feature of AI quite often.
Billionaire venture capitalist Chamath Palihapitiya recently took to X (the social media platform formerly known as Twitter) to predict that applications in voice will be the "front door" to the next frontier of the AI revolution.
Let's break down the market for AI-powered voice software, and explore some investment opportunities in the space.
How big is AI-powered speech?
A number of companies compete in the voice-recognition software market. Apple entered the niche through its acquisitions of Siri and Shazam. The Siri virtual assistant has become integrated throughout Apple's ecosystem and is a staple in the company's devices. Amazon has leveraged the technology in its Echo devices, and Alphabet has done the same in its Google Home smart home appliances.
On top of that, Microsoft (MSFT -1.00%) and Nvidia also entered the voice-recognition software market through a series of savvy investments.
According to Statista, the total addressable market for voice-recognition tools is forecast to reach nearly $50 billion by 2029. Considering the opportunities in this pocket of the AI landscape, it's not surprising that so many big tech enterprises are competing in it.
Image Source: Getty Images.
Who are the leaders in the voice-recognition market?
Two of the more prominent names in the voice-recognition market right now are SoundHound AI (SOUN 5.00%) and Microsoft.
Earlier this year, investors learned that Nvidia has a small ownership stake in SoundHound AI. After that information became public, the shares of SoundHound AI soared by as much as 320%. Although some of that momentum has waned, the company remains a top name in AI.
One of the biggest use cases for SoundHound AI's tech is voice-controlled systems in cars. With clients including Stellantis, Honda, and Hyundai, it's clear that the company has been able to attract some brand recognition.
SoundHound AI recently said that it will be offering Nvidia's DRIVE software to its automaker customers. Some applications for this technology include helping drivers answer questions related to vehicle maintenance, safety features, and car settings.
Shortly after SoundHound AI released details about its partnership with Nvidia, ChatGPT developer OpenAI made an announcement of its own. Namely, it revealed its latest product, Voice Engine, a tool that aims to help in areas such as video translation as well as in clinical settings related to speech therapy.
Plenty of promise and a few risk to consider
I agree with Palihapitiya's assertion that voice will play a big role in the further development of artificial intelligence services. In a way, it makes total sense. The sophistication of AI use cases is evolving in real time. Leveraging voice points to a future in which AI becomes even more ingrained in many aspects of daily life.
For this reason, some investors may be eager to get in on the action. As with any investment, however, there are risks.
Sure, SoundHound AI's partnership with Nvidia is exciting on the surface. But with only $46 million in revenue last year, coupled with mounting operating losses, SoundHound AI may not be the most prudent opportunity in voice-recognition technology.
Furthermore, when you layer in that Nvidia DRIVE is also being used by many other customers -- including SoundHound AI's competitor Cerence -- the potential for the partnership between the two appears less lucrative because it's not exclusive.
On the other hand, investing in Microsoft may be a subtle way to benefit from breakthroughs in AI-powered speech technology. The company is a major investor in OpenAI. Moreover, throughout 2023, Microsoft aggressively implemented ChatGPT across its Windows operating system -- a move that has unlocked a new phase of growth.
Although Voice Engine is not yet commercially available, I suspect that OpenAI will release it once it figures out how to best mitigate the risks that come with voice-mimicking technology.
Nevertheless, given Microsoft's close ties to OpenAI, I see it as a major beneficiary of voice-recognition software in the long run, and a much more proven, established opportunity in the AI narrative overall compared to other smaller competitors.
