There's no doubt about it: Artificial intelligence (AI) will be the biggest growth opportunity this decade. And while there are many AI stocks to choose from, the most promising businesses already have a ton of investor attention.

There is one $12 stock, however, that few AI investors seem to be monitoring. The growth potential is sizable, but there is one crucial risk factor to be aware of before jumping in.

Nvidia was a big fan of this AI stock

SoundHound AI (SOUN -0.79%) captured Wall Street's imagination in 2023 when Nvidia disclosed a $3.7 million investment. At the time, Nvidia was making a variety of small investments across a portfolio of AI businesses that it believed could further accelerate the AI space.

The company ultimately formed formal partnerships with many of these businesses. It worked with SoundHound, for instance, on an in-vehicle artificial intelligence (AI) platform, combining Nvidia's expertise in GPUs and software architecture with SoundHound's voice assistant technologies. The result was an in-vehicle experience that allowed drivers to chat and interact with their vehicles like never before.

The GPU maker ended up selling its SoundHound stake at a healthy profit in 2024. But its star power helped the company's stock price skyrocket from $5 to $25 over its holding period of roughly one year.

Since Nvidia exited its stake, SoundHound's stock price has slid back to around $12. However, that's still much higher than the company's valuation when Nvidia first got involved.

With the stock now trading 50% below its peak, is it time to take another look at this former AI darling? Although Nvidia is no longer directly financially invested, its involvement brought SoundHound into the limelight, adding crucial validation for a relatively small business. Could it become the next big thing in AI?

A human hand and robotic hand typing on the same keyboard.

Image source: Getty Images.

AI that you can talk to

SoundHound's business deals strictly with applying AI technology to sounds. The company has already worked with several major automakers on in-vehicle chat assistants.

It has also worked with nationwide fast-food chains on automated drive-thrus, and with countless other companies to develop AI chatbots that answer customer-service lines. Anywhere the voice of a human can potentially be replaced with the voice of an AI agent, SoundHound is working to make that possible.

This market segment within the broader AI industry is still quite sizable. Some estimates call for the global sound-AI market to grow from around $2 billion in 2024 to more than $47 billion by 2034, an annual growth rate of more than 30%.

Take a look at SoundHound's growth and you'll quickly appreciate how well the company is taking advantage of this underlying opportunity. In 2023, it increased sales by 47% year over year. In 2024, that jumped to 85%.

This year, analysts expect sales to grow by 96% -- though it should be noted that 2026 is expected to yield a mild sales jump of just 29%.

Shares trade at a lofty price-to-sales ratio of 36.3, but the market clearly understands that SoundHound could maintain elevated growth for years, if not decades. The issue won't be underlying market growth but competition.

Nearly every major tech company is developing its own form of voice AI technology, and it's uncertain whether SoundHound's $90 million annual research and development budget can sustain itself over time. It's simply not clear if the company has a reliable competitive advantage over better-financed peers.

Could SoundHound become the next big thing in AI? Absolutely. But the success of the business will hinge on its ability to compete over the long term, not on the available opportunity.