Nvidia (NVDA +1.95%) has clearly been one of the market's top performers in recent years. The chip designer has soared 2,600% over the past five years, and this year, the stock is heading for a 148% gain. The reason for such momentum? Nvidia not only dominates the artificial intelligence (AI) chip market, holding 80% share, but has also built an AI empire. The company offers a wide range of products and services -- from enterprise software to networking solutions -- to suit any AI customer's needs.
All this has translated into outsize earnings growth, with revenue and profit climbing in the triple digits quarter after quarter -- and margins topping 70%. There's also reason to be optimistic about Nvidia continuing this performance since the company has put a focus on innovation, promising to update its chips once a year.
So, Nvidia surely has more gas in the tank to power share gains. But despite all this, another AI stock is gaining on Nvidia this year when it comes to performance. If this continues, this stock could be the biggest winner of 2024. Let's find out more about this high-growth AI stock that may outperform market star Nvidia this year.
Image source: Getty Images.
An expert in AI voice assistants
This player doesn't compete with Nvidia but rather operates in a different yet promising area of AI: AI-driven conversational voice assistants. I'm talking about SoundHound AI (SOUN +1.89%). The company stands out thanks to its proprietary speech-to-meaning technology, where the platform understands speech as it's happening without having to turn that speech into text first. This results in faster, higher-quality results and gives users the feeling that they're having a natural conversation.
And SoundHound's expertise is protected by a solid portfolio of patents, about 155 granted and 115 pending.
SoundHound is already conquering various markets, including automotive, restaurant, and customer service -- think ordering food or communicating with your car, for example. The company aims to expand into others, such as financial services and healthcare. All this represents a total addressable market of $140 billion.
Speaking of healthcare, SoundHound made a recent acquisition, buying conversational AI player Amelia -- a move that should boost its reach in healthcare and other markets.
In fact, SoundHound says the purchase "massively" increases the company's addressable markets, and the combined company now has 200 "marquee" customers. A few weeks after the purchase, SoundHound offered some news regarding its expanded business, saying MUSC Health deployed an Amelia tool to help patients manage their appointments 24/7.
NASDAQ: SOUN
Key Data Points
SoundHound's focus on growth
How does this translate into earnings? Well, SoundHound isn't yet profitable, but that isn't shocking for a company at this stage of its growth story. Now is the time to spend heavily on research and development (R&D) to secure market leadership and on marketing to grow the customer base. Both of these metrics are on the rise, with R&D climbing 34% year over year in the most recent quarter and marketing spending advancing 11%.
And other metrics look very encouraging. For example, quarterly revenue soared 54% to $13.5 million, and the cumulative subscriptions and booking backlog doubled year over year to $723 million. SoundHound has also been receiving more and more queries about its services, showing it's attracted the eyes of potential customers. It's now reached an annual run rate of 5 billion queries.
This AI voice giant also has a strong cash position of more than $200 million and has made progress in paying down debt -- signs that it has the financial structure to support growth.
Now, let's get back to the subject of stock performance. Today, SoundHound is heading for a 121% increase this year, still lagging behind Nvidia -- but not by all that much. If the AI chip giant's shares stagnate a bit or slip and SoundHound gains more momentum, possibly based on additional contract wins or other positive news, SoundHound could step ahead.
Considering earnings and stock performance so far, both companies will likely deliver great performances this year -- they're most of the way to the finish line. But the year isn't over yet. And SoundHound may have what it takes to capture the crown of biggest winner in 2024.
