SoundHound AI (NASDAQ: SOUN) suffered a massive blow on February 14, 2025, plunging 28.1% to close at $10.97 after Nvidia (NASDAQ: NVDA) disclosed it had fully exited its stake in the voice AI company.
The sudden exit raised concerns over SoundHound AI’s future, triggering a sharp sell-off as investors reacted to Nvidia’s decision to cut ties with SoundHound AI. The move deepened concerns about the company’s growth trajectory, especially without the backing of a major AI powerhouse.
Nvidia revamps its portfolio
According to regulatory filings, Nvidia previously held 1.71 million shares of SoundHound AI, valued at approximately $33.57 million at the end of 2024, based on the stock’s closing price of $19.43 on December 31.
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While this stake was relatively small compared to Nvidia’s $3.36 trillion market cap, its complete divestment sent a negative signal to the market, adding to concerns about SoundHound AI’s trajectory.
Nvidia’s exit was part of a broader reshuffle of its investments. The company also cut its stake in Arm Holdings (NASDAQ: ARM) by 43.83% and offloaded shares in Serve Robotics (NASDAQ: SERV) and Nano X Imaging (NASDAQ: NNOX).
In addition to these sales, Nvidia made new investments in WeRide Inc., a Chinese self-driving technology company, and Nebius Group N.V., an AI cloud computing firm.
What’s next for SoundHound AI?
Nvidia’s exit raises fresh concerns for SoundHound AI investors. Even after the sharp decline, the company trades at 26.8 times its projected sales for the year, keeping it vulnerable to further volatility.
While SoundHound AI has posted strong revenue growth and remains a player in the expanding voice AI market, its high valuation leaves it exposed to fluctuations in investor sentiment, a challenge often seen with companies that rely heavily on future earnings expectations.
On the bright side, although Nvidia is no longer in the picture, SoundHound AI’s core technology in voice recognition remains relevant in the expanding AI market, with the company maintaining a strong footprint in healthcare, automotive, and smart devices.
Analysts remain optimistic, with Wedbush analyst Daniel Ives staying bullish, calling SoundHound AI ‘a long-term winner in the AI revolution’.
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