Nvidia Sold All of Its SoundHound AI Stock. Should Investors Follow This AI Leader?

Core Viewpoint - Nvidia's divestment from SoundHound AI raises concerns among investors, but it may present a buying opportunity given the company's strong growth potential in 2025 [2][3][4]. Group 1: Nvidia's Investment and Divestment - Nvidia sold all of its stake in SoundHound AI, which was valued at $33.7 million as of December 31, 2024, leading to a sell-off in SoundHound's stock [2]. - Nvidia's stake in SoundHound was relatively small compared to its overall portfolio, owning only 1.7 million shares [2]. - The decision to sell may not have been driven by business reasons, as Nvidia generated $16.8 billion in free cash flow last quarter and holds $38.5 billion in cash and short-term investments [3]. Group 2: SoundHound's Growth Potential - SoundHound AI's revenue increased by 89% in Q3, indicating strong growth potential [4]. - Preliminary guidance for 2025 suggests revenue could reach between $155 million and $175 million, effectively doubling from the projected $82 million to $85 million in 2024 [5]. - Despite the sell-off, SoundHound's stock is still trading at 50 times sales, which is considered expensive but may be justified by the anticipated revenue growth [6][7]. Group 3: Market Sentiment and Future Considerations - The stock faces high selling pressure as investors reassess their positions following a strong performance last year [8]. - If Q4 results do not exceed expectations, further sell-off may occur, and the stock could be reconsidered post-earnings [8]. - Investors are advised to be patient, as uncertainties remain regarding SoundHound's performance, and taking profits may be prudent for those with significant gains [9].