Shares of SoundHound AI (NASDAQ: SOUN) rose 86.3% in the first half of 2024, according to data from S&P Global Market Intelligence. The stock soared to a stellar 320% gain by the middle of March, inspired by a modest Nvidia investment in the voice control expert’s stock. The early excitement has faded, but SoundHound AI’s shares still benefit from the Nvidia connection.

A speculative price pop, courtesy of Nvidia

SoundHound AI has experienced a busy year so far. The stock price dropped more than 20% in three of the first half’s six months, but also popped 282% in February and 19% in May.

The biggest market-moving news was Nvidia disclosing a $3.7 million investment in the company. Nvidia isn’t known for buying stocks in other tech companies. In fact, the February report was the first 13F filing in the company’s history. That’s why it was such a big deal to see Nvidia taking an active interest in SoundHound AI.

Later, Nvidia explained that it is integrating SoundHound AI’s voice control technology into the Nvidia Drive autonomous vehicle platform. This development partnership is still in its early stages, adding voice-based interaction with large language models (LLMs) such as ChatGPT in cars built around the Nvidia Drive system.

But SoundHound AI didn’t highlight Nvidia as a large customer in May’s first-quarter report, so that partnership probably isn’t generating any revenue for the audio analysis expert yet.

Hence, Nvidia’s investment may be the first sign of a profitable long-term relationship, but it’s nothing more than a small equity investment and an early platform development deal so far. And it makes perfect sense to see the speculative investor excitement in February and March fade to a milder boost for the first half as a whole.

SoundHound AI’s long-term growth plans

SoundHound AI’s technology and its integration into Nvidia’s autonomous vehicle platform hold promise for future growth. As the development partnership progresses, there is potential for game-changing revenue generation if the technology proves successful and gains widespread adoption.

But SoundHound AI has many other irons in the fire.

  • Earlier this week, carmaker Stellantis launched a ChatGPT-based SoundHound AI system for Opel, Vauxhall, and Peugeot cars in 11 European countries. This rollout has been waiting in the wings for months and SoundHound AI may follow up with a broader launch with long-term clients such as Honda Motor or Hyundai.

  • In June, the company acquired food ordering specialist Allset, nearly doubling SoundHound AI’s client list in the food service sector and setting the stage for rapid growth in this market.

  • The Houndify solution for phone-based contact centers didn’t see any major developments in the first half, but this is the third leg of SoundHound AI’s long-term growth plans. Big-name customers are few and far between so far, but I expect the client list to grow in 2024 thanks to the company’s Nvidia-powered branding boost.

SoundHound AI’s stock performance in the first half of 2024 has been nothing short of impressive. The Nvidia investment and the expansion in key markets with Stellantis and Allset highlight the company’s potential for significant growth.

Investors should stay on their toes with this stock, keeping an eye on how well the company executes its growth plans in an ever-changing competitive landscape. With smart management and ongoing innovation, SoundHound AI could firmly establish itself as a leader in AI-driven solutions across various industries. And the road ahead may be bumpy, in the grand tradition of growth-oriented companies with modest revenue streams, but I think SoundHound AI is a long-term steal at today’s prices.

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Anders Bylund has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.

Why SoundHound AI Stock Started 2024 on a Very High Note was originally published by The Motley Fool

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