Company Overview - SoundHound AI experienced a remarkable stock surge of 836% in 2024, making it one of the hottest stocks that year due to its impressive growth [1] - However, in 2025, SoundHound's stock has declined by 46%, attributed to increased investor risk aversion amid a tariff-fueled trade war and fears of a global recession [2] - As of now, SoundHound's market cap stands at $4.33 billion, with the stock trading at an expensive 39 times sales, indicating potential for further downside [3] Ambarella's Growth Potential - Ambarella, a smaller chip company with a market cap of $2.65 billion, is benefiting from the rising demand for AI in various devices, which is significantly boosting its business [5] - The company’s computer vision processors are well-suited for edge applications, and the growing adoption of AI in these devices is expected to be a key growth driver [6] - The market for chips capable of processing AI workloads locally is projected to grow 20 times by 2034, with edge AI already accounting for 70% of Ambarella's revenue in fiscal 2025 [7][8] Financial Performance - Ambarella reported a 26% increase in revenue to $285 million in the previous fiscal year, with expectations of a revenue forecast of $81 million to $87 million for Q1 of fiscal 2026, indicating a year-over-year growth of 54% [8][9] - The company anticipates a profit of $0.04 per share in the upcoming quarter, a significant turnaround from a loss of $0.26 per share in the same period last year [9] - Ambarella's addressable market is expected to exceed $8 billion by fiscal 2028, representing a 60% increase from fiscal 2024 levels, suggesting substantial growth opportunities [10] Comparative Valuation and Market Position - Ambarella is projected to achieve a top line of $463 million in three years, potentially increasing its market cap to $4.2 billion if it continues to trade at 9 times sales, a 60% increase from current levels [15] - In contrast, SoundHound's revenue is expected to reach $277 million in the same timeframe, which may result in a lower market cap compared to Ambarella if it does not command a premium valuation [16] - The market is likely to favor Ambarella due to its improving earnings power, while SoundHound is expected to remain loss-making for the next three years [13][15]