Which AI Stock, NVIDIA or SoundHound AI, Offers Better Gains?

NVIDIA Corporation NVDA and SoundHound AI, Inc. SOUN have made significant inroads in the artificial intelligence (AI) space, boosting their stock prices over the last year. Both are targeting distinct AI segments, so let’s determine the one with greater gains. 

The Bullish Case for SOUN Stock 

The temporary trade agreement between the United States and China is good news for SoundHound AI stock. Tariffs on Chinese imports are lowered to 30% from 145%, and China has reduced the import duty on American commodities to 10% from 125%. The 90-day truce benefited companies with trade in the United States and China. 

Thanks to the deal with Tencent, SoundHound AI now operates in China. Tencent will integrate SoundHound’s voice AI into its cloud solutions for the automotive sector. As a software company, SoundHound AI may not be directly affected by tariffs; however, its cost of doing business rises significantly. Moreover, if tensions escalate, SoundHound AI may be blacklisted by China, impacting its partnership with Tencent. 

As more enterprise customers use SoundHound AI’s platforms, the company’s first-quarter 2025 revenues jumped 151% year over year to $29.1 million. Its adjusted earnings per share (EPS) loss in the first quarter narrowed by 14%. The company finished the quarter with positive cash and cash equivalents and no long-term debt. For full-year 2025, the company aims for 85% to 90% revenue growth and a positive adjusted EBITDA. 

The Bullish Case for NVDA Stock 

NVIDIA is poised to gain from the billions of dollars spent on AI infrastructure by companies such as Amazon.com, Inc. AMZN and Alphabet Inc. GOOGL. These cloud computing companies are acquiring NVIDIA’s graphics processing units (GPUs) to boost computing power for AI workloads. Alphabet, in particular, said that growth from its AI products in the latest reported quarter was much higher than that of Google Cloud. 

By 2028, NVIDIA forecasts AI data center spending to hit $1 trillion, fueling stock growth. NVIDIA’s advanced chips are also in high demand, with shipments of its latest cutting-edge new-generation Blackwell chips surging by the day due to their faster AI interface and improved energy efficiency. Additionally, the popularity of the CUDA software platform has increased among developers and is expected to improve NVIDIA’s quarterly performance (read more: Can Palantir Stock be the Next NVIDIA, and Is It Worth Buying?). 

NVIDIA or SoundHound AI: Which Stock Has Greater Gain Potential? 

No doubt, the latest trade deal and widespread adoption of SoundHound’s voice-enabled AI systems are positives for the stock. However, the company is simply growing through acquisitions and less organically. If diverse corporate cultures don’t seamlessly blend, then it can be a hindrance to SoundHound AI’s growth story.  

SoundHound AI isn’t profitable yet and has often failed to meet its guidance, impacting the stock’s growth. Despite issuing positive EBITDA guidance in the fourth quarter of 2023, the company’s adjusted EBITDA remained a negative $22.2 million five quarters later. On the other hand, NVIDIA has generated profits more proficiently than the Semiconductor - General industry, with its net profit margin coming in at 55.9%, higher than the industry’s 49.5%, a tell-tale sign that the stock has more room to scale upward.  

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Furthermore, SoundHound AI lacks a competitive edge like NVIDIA has with GPUs. NVIDIA’s more than 80% market share in the GPU space will help the stock sustain market volatility, which could pose challenges for SoundHound AI. This indicates, NVIDIA can offer better and consistent gains in the near future. For now, both NVIDIA and SoundHound AI have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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