Nvidia’s Portfolio Shuffle: What it Means for SoundHound AI and Serve Robotics
Recently, Wall Street caught wind of Nvidia’s (NVDA) latest moves through filings with the Securities and Exchange Commission. The AI chipmaker decided to sell its stakes in Serve Robotics (SERV), a pioneer in last-mile delivery, and SoundHound AI (SOUN), a leader in voice technology. It wasn’t surprising that this news led to a notable dip in both companies’ stock prices.
SERV data by YCharts
Nvidia stands as a formidable player in the AI hardware space, and its strategic decisions often serve as bellwethers for wider market trends. Some might view Nvidia’s retreat from these investments as a red flag, but I think it’s more about profit-taking after impressive stock gains rather than any underlying issues. As a result, I decided to hold back on buying recently; however, I see this as a perfect opportunity to bolster my positions in both tech innovators.
1. SoundHound AI: A Booming Voice AI Landscape
SoundHound AI has been transforming how we interact with devices since 2005, making it possible for natural conversations between people and technology. Its adaptable platform caters to a variety of sectors, from automotive to hospitality, highlighting its incredible versatility.
After seeing a staggering 143% rise in stock over the last 90 days, Nvidia’s decision to cash out raises eyebrows. Still, I see this as a potential opportunity. SoundHound’s strength lies in its independent voice AI platform, built on proprietary technology that enables smooth interactions across diverse industries.
The market potential is nothing short of massive. SoundHound anticipates its addressable market—primarily driven by device royalties, subscription services, and advertising—might reach an astonishing $140 billion by 2024. It projects revenues of $82 million to $85 million for the upcoming year, scaling even higher to $155 million to $175 million in 2025. Plus, with a backlog of bookings and subscriptions exceeding $1 billion, there’s evidently strong financial momentum behind this AI voice trailblazer.
Partnerships bolster its prospects. SoundHound has secured major automotive contracts with Stellantis, the parent company of brands like Jeep and Dodge, and has made significant strides in the restaurant and financial services sectors.
Yet, I’m not blind to the risks. As an early-stage company, SoundHound must navigate substantial operating losses, high R&D costs, and rapid cash burn—all while competing with tech giants. How effectively they execute their plans will be vital to their success.
I’m particularly excited for the results from SoundHound’s fourth-quarter earnings call, set for February 27, 2024. Despite Nvidia’s exit, I feel the recent stock dip creates an attractive entry point for investors eager to get in on the ground floor of the rapidly-growing voice AI sector.
2. Serve Robotics: Revolutionizing Last-Mile Delivery
Born from within Postmates, Serve Robotics is tackling the challenging last-mile delivery issues with its fleet of autonomous robots. The current landscape couldn’t be more favorable, especially as major platforms like DoorDash face increasing costs that sometimes outstrip their revenue growth.
Like SoundHound, Serve Robotics has seen speculative stock movements, with a remarkable 174% rise in price over the last three months that likely triggered Nvidia’s profit-taking. Still, beyond the numbers, there’s a compelling case for its technology and market position.
According to Ark Invest’s “Big Ideas 2024” report, the market for robotic and drone delivery is projected to soar to $450 billion by 2030. Serve Robotics has demonstrated clear capability, achieving over 50,000 deliveries in Los Angeles with an impressive 99.94% reliability—far surpassing traditional human drivers. Plus, Serve’s collaboration with Uber Eats could see the rollout of 2,000 delivery robots by 2025, setting the stage for substantial revenue growth.
Technical advancements are also noteworthy. Serve Robotics’ Gen3 commitment boasts a top speed of 11 mph, impressive battery life, and has achieved level 4 autonomy while reducing costs by 50% compared to earlier models, establishing a competitive edge in the market.
On the partnership front, Serve has teamed up with Magna International for production while a deal with Wing Aviation could vastly expand its reach through robot-to-drone integrations—making its operations all the more efficient.
Of course, challenges remain. The company is still in the revenue generation phase and faces significant cash burn while ramping up operations. Achieving its ambitious growth targets and managing costs amid competitive pressures will be crucial moving forward.
Despite Nvidia’s exit and the inherent risks, I believe the current dip provides an exciting entry opportunity into what could be a leader in autonomous urban delivery. I’m seizing this moment to increase my position and prepare for future growth catalysts rolling out as we approach 2025.
Conclusion
In summary, Nvidia’s reshuffling should not overshadow the bright futures of SoundHound AI and Serve Robotics. Both companies are navigating distinct but promising avenues within the expansive AI landscape. As compelling investment opportunities arise through market fluctuations, remember that every setback can indeed be a setup for a comeback. The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.
