Nvidia (NVDA 2.57%) and SoundHound AI (SOUN 1.40%) have been on a red-hot streak in 2024, setting the stock market on fire with their impressive gains. However, a closer look at the trajectory of these two companies’ shares reveals that their spikes can be attributed to different reasons.
Nvidia has seen a 90% increase in its stock price this year, driven by outstanding top- and bottom-line growth fueled by the high demand for its GPUs and processors for AI servers. On the other hand, SoundHound AI gained attention in February when it was revealed that Nvidia holds a stake in the company, leading to a 347% jump in its stock price.
While SoundHound AI has experienced a pullback since March, with shares down more than 38%, the company has been delivering healthy growth thanks to the increasing deployment of its AI voice-recognition technology across various industries. The recent first-quarter results have boosted investor confidence, with a 73% year-over-year increase in revenue and an updated revenue guidance indicating strong growth potential.
On the other hand, Nvidia, with its dominant market share in data center GPUs and strong earnings power, presents a compelling investment opportunity in the booming AI infrastructure market. The company’s technological advantage and expected growth in the AI chip market position it as a safer and more promising AI stock compared to SoundHound AI.
Despite Nvidia’s higher valuation, justified by its faster growth and market position, it appears to be the better AI stock to buy for investors looking to capitalize on the AI boom. With a strong market position and growth prospects, Nvidia stands out as the top choice for investors seeking exposure to the AI sector.
