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Nvidia, the kingmaker in the artificial intelligence (AI) hardware industry (NASDAQ:NVDA), recently revealed an investment in SoundHound AI (NASDAQ:SOUN). However, after the price went up and down rapidly, I am neutral on SOUN stock and choose to stay out of the way.
SoundHound AI provides a voice artificial intelligence (AI) platform that enables businesses to deliver conversational experiences to their customers. For example, the company recently introduced a conversational AI product specifically for restaurant workers. This is a fascinating little company that’s currently trending in Nvidia news.
Nvidia invests in SoundHound
So let’s break down the big news. 13-F, Nvidia (NASDAQ:NVDA) has bought a stake in SoundHound AI, a giant AI hardware maker.
More specifically, at the end of last year, Nvidia reportedly held 1.73 million shares of SoundHound stock, worth about $3.67 million at the time. Of course, this speaks volumes because Nvidia will be the true kingmaker among AI-focused companies in 2024.
From a financial perspective, SoundHound AI is unfortunately not a profitable company. However, SoundHound AI managed to reduce its quarterly loss from $30,061,000 in Q3 2022 to $20,197,000 in Q3 2023.
Regarding Nvidia stock, Wedbush Securities analyst Dan Ives said: [SoundHound] This investment further strengthens the company’s brand in the AI revolution. ” This is a reasonable valuation, but smart investors may be wary of buying SOUN stock after today’s 66.7% share price increase.
Is SOUN stock a buy, according to analysts?
At TipRanks, SOUN is rated a Strong Buy, based on 3 unanimous Buy ratings assigned by analysts over the past 3 months. SoundHound AI’s average price target is $4.67, suggesting 24.2% upside potential.
If you’re wondering which analyst to follow if you want to buy or sell SOUN stock, the most accurate analyst covering this stock (over a 1-year period) is Michael Lattimore of Northland Securities, with an average return of 12.64%. The rating and success rate is 71%. Click on the image below for more information.
Conclusion: Should you consider SOUN stock?
Of course, having the almighty Nvidia as a shareholder is a huge win for SoundHound AI. Meanwhile, the market was in turmoil today, with SOUN stock being bought in panic. So cautious investors should probably consider letting the stock settle for a while before considering a purchase.
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