The AI Throne: Will Nvidia’s Reign End in 2025?
As the artificial intelligence (AI) sector continues to evolve, investors are wondering if 2025 will be the year that chipmaking giant Nvidia’s dominance comes to an end. With a market cap exceeding $3.3 trillion, some investors are questioning whether Nvidia’s growth rate will slow down this year.
Nvidia’s Impressive Track Record
Nvidia’s massive market cap valuation is built on more than just potential and promise. The company’s revenue and earnings per share have soared over the past three years, with its stock price keeping pace. Demand for Nvidia’s advanced chips and architecture for building and training large language models (LLMs) and other AI applications remains strong.
A Shift in Growth Rate
However, the pace of revenue growth from Nvidia’s data center segment has already slowed from year-ago levels. While sales growth is expected to continue, aggressive investors might be looking for alternative AI stocks to invest in.
SoundHound AI: A Rising Star
One such company is SoundHound AI, a maker of voice recognition AI technology solutions. Nvidia itself has invested in SoundHound AI, buying 1.73 million shares of its stock in the final quarter of 2023. SoundHound AI’s stock has broken out, with a growth of over 650% in the last year, despite a recent pullback.
Expanding Market Potential
SoundHound AI’s market potential has expanded beyond voice technology applications in customer service sectors to include automotive use cases for voice generative AI. The company has also announced a new hands-free voice assistant for electric vehicle maker Lucid’s luxury vehicles. Management has increased its 2024 revenue guidance by nearly 20% in just six months, with sales expected to double to $165 million in 2025.
Risks and Rewards
While SoundHound AI’s growth prospects are enticing, the company still isn’t profitable, and its cash position has dropped significantly. This elevated risk tilts the balance of an investment decision in Nvidia’s favor.
Nvidia’s Added Opportunities
Nvidia still has growing revenue and profits, with innovative GPU products, robotics, and automotive segments that haven’t yet meaningfully contributed to earnings. The company’s prospects in self-driving vehicles and robots designed to boost efficiency in many industries could go mainstream in the coming years, providing added opportunities for growth.
The Better Investment
While SoundHound AI could be a rewarding investment, Nvidia’s growing revenue and profits, combined with its innovative products and added opportunities for growth, make it the better investment, even at its current stage and valuation.
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