1 Reason Wall Street Is Obsessed With SoundHound AI

Key Points

• SoundHound AI grabbed Wall Street's attention last year thanks to its partnership with Nvidia.

• The companies are teaming up on voice-controlled vehicle technology using Nvidia's Drive platform.

• Despite its meme stock reputation, SoundHound AI has a serious business model and innovative AI products.

• 10 stocks we like better than SoundHound AI ›

Building voice control systems around advanced artificial intelligence (AI) makes SoundHound AI (NASDAQ: SOUN) a promising investment these days. But that's not the whole story.

In short, SoundHound AI is the talk of the town (and by "town," I mean Wall Street) because of its tight connection with AI pioneer Nvidia (NASDAQ: NVDA).

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Two peas in an AI pod

This used to be a pretty obvious thing. SoundHound AI's stock surged sky-high in early 2024 because Nvidia made a small investment in the company's stock. The AI chip giant followed up with not one but two SoundHound AI partnerships. The companies are working together on voice-controlled vehicle features as part of the Nvidia Drive platform. Furthermore, SoundHound AI is working closely with Nvidia to deliver real-time AI responses even if you don't have access to the internet.

Nvidia has sold its handful of SoundHound AI shares. Many investors may have forgotten this important connection, but the two projects are still happening. For example, SoundHound AI recently presented new in-car ordering systems that rely on the vehicle's Nvidia-powered AI hardware -- not the fast food restaurant's digital tools.

Image source: Getty Images.

Don't sleep on SoundHound AI's earnings

You might have written SoundHound AI off as a pure meme stock in recent months, driven more by social media posts than business prospects. That's a mistake. Sure, SoundHound AI's shares still look a bit pricey after the meme-based shenanigans of 2024, but the company also runs a serious business -- and it can't hurt to have Nvidia as a partner.

I expect more details about SoundHound AI's cozy Nvidia connections in next Thursday's second-quarter earnings call. The company has delivered mixed results in recent quarters, with soft revenue growth but plenty of bullish bottom-line surprises. I don't recommend loading up on SoundHound AI's pricey stock ahead of this event, but you could set up a small position just to keep an eye on this promising AI stock in the long run.

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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 has a disclosure policy.