Nvidia delivered solid earnings. Will it be enough to lift AI stocks like SoundHound?
Nvidia (NVDA) delivered its highly anticipated Q4 earnings on Wednesday, reporting adjusted earnings per share of 89 cents, compared to Wall Street’s consensus estimate of 85 cents, with revenue at $39.3 billion, beating analysts’ $38.1 billion projection.
Its revenue of $43 billion also beat the consensus forecast of $42.1 billion.
However, after AI’s blistering rally had shown recent signs of sputtering out, it remains to be seen if Nvidia’s pretty good earnings will be good enough for investors.
After all, its revenue has been slowing for several quarters in a row now and there continues to be concern about competition from Chinese rival DeepSeek.
Investors are also showing a lot of uncertainty about the tech sector in anticipation of Trump’s trade policies to take effect, which made Nvidia’s earnings report especially important for market watchers.
And given Nvidia’s role as the leading manufacturer of chips that power most AI startups, its business has an outsized influence on the entire industry.
AI selloff amid tech stock slump
Take SoundHound AI (SOUN), a leading provider of conversational AI software. The Santa Clara, Calif.-based startup’s stock surged at the end of 2024, climbing by 375% across November and December.
SoundHound beat analysts’ revenue expectations by 7.5% last quarter, reporting revenues of $25.09 million, up 89.1% year on year. But the stock has been pummeled so far this year, shedding nearly 53%.
Now, part of this is likely the correction that the entire AI industry has faced, as investors have begun to worry that after a scorching year for AI stocks last year, many of them might now be overpriced.
However, SoundHound’s dip goes further than being the result of a broad market selloff by antsy investors: Nvidia had once been an investor in the startup, but it revealed in its recent 13F filing that it had sold all of its shares in SoundHound.
Nvidia had owned 1.7 million shares of SOUN, worth just over $8 million. What made this an especially tough hit for SoundHound was that it was its connection to Nvidia that brought the startup to the attention of most investors.
While it’s unclear why Nvidia decided to dump all of its SoundHound shares, industry analysts began speculating whether this signaled that it planned on encroaching on the startup’s market in conversational AI software.
SOUN immediately plunged 28%.
Despite this recent setback and the dip in its stock, SoundHound could get back on investor’s good side with the launch this week of its latest AI-powered drive-thru solution for restaurants to offer omnichannel ordering to their customers.
By offering solutions to fast-casual restaurants, SoundHound could be carving out a niche space that fewer AI startups are entering. This will be especially important as the AI arms race continues to heat up.