Arm has a 45.5 P/S ratio based on its $2.9 billion trailing-12-month revenue. Arm stock is more costly than Nvidia, which has a 35.9 P/S ratio. Given Arm's 19.6% planned revenue increase in the current fiscal year compared to Nvidia's 80.1%, the gap is even more alarming.
Buying Arm shares for more than Nvidia is hard to justify. Arm may provide long-term value for investors, but they may need to wait for a stock market correction to gain a better entry price. Arm stock may be worth buying if it drops 30% or more.
2. SoundHound AI At $2.5 billion, SoundHound AI is modest compared to Arm. However, its conversational AI technology, which recognizes voice cues and responds, gives it great potential.
SoundHound's AI automates drive-thru, phone, and in-store ordering for hospitality giants. Its innovative Employee Assist system answers staff queries to speed up customer service and in-store operations. Jersey Mike's, White Castle, and Krispy Kreme use SoundHound. SoundHound distributes its technologies through Toast, Block's Square, and Olo.
Mercedes-Benz and Stellantis integrate SoundHound's automotive solution to produce effective driver virtual assistants. SoundHound recently partnered with Nvidia's Drive platform to provide edge generative AI for car manufacturers. Drivers can use their voice assistant without a network, expanding use cases and improving privacy.
To immediately access car functions, drivers can talk to their AI assistance. In addition to booking meals and trips, it can do much more. After its big run-up this year, SoundHound stock is expensive like Arm.
SoundHound stock has a P/S ratio of 55.5 despite its 47% year-over-year revenue rise of $45.9 million in 2023. The corporation had a $661 million order backlog at the end of 2023, double the amount in 2022.
That suggests SoundHound's revenue could grow quickly, so investors who can hold the stock for a few years may do well despite its premium price. As a partner and shareholder, Nvidia is behind the startup.
stay turned for development