Nvidia dumps SoundHound. But who did it buy as a replacement?

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

Out with the old, in with the new
Who are Nebius and WeRide?
Bigfoot?

If that’s enough to get the tech giant stock trading, read on…

AI Collision 💥

Nvidia pumps SoundHound then dumps it.

Over the last 12 months SoundHound AI has been one of the AI market’s best performers.

The company’s stock soared, as it rode the generative AI boom thanks to demand for voice-based AI creation applications in the car industry, hospitality, and consumer markets.

Its price was around $1.70 in January 2024, rising to an astronomical $24.98 in late December.

There are a few reasons for this meteoric rise.

Primarily, the company is one of the leaders in AI-generated voice services. With big deals in the automotive industry, retail and hospitality the company has been an early mover ahead of the rise of generative AI.

However, things really exploded higher for SoundHound when it was revealed in February 2024 that Nvidia owned 1.73 million shares of SoundHound.

When the market got wind of this it sent SoundHound’s stock price to a high of $10.25 by mid-March. This tie-up with Nvidia helped to drag SoundHound along for the rest of 2024, and as the AI boom continued its momentum, so did SoundHound.

Until the ride stopped last week.

The market loves it when a mega-cap giant like Nvidia with its $3.4 trillion market cap and seemingly endless supply of cash buys up another AI company.

If it’s good enough for Nvidia, it’s good enough for investors.

That’s great on the way up. But what happens when a company like Nvidia gets sick of said company and sells off its stock holding?

Here’s what:

Nvidia’s latest F-13 report (which shows its stocks holdings) from Friday had a notable absentee… SoundHound.

This absence means Nvidia sold off its stock during the quarter ended 31 December 2024.

Uh oh! As this news found its way to the market, SoundHound dumped 28%. After the Presidents’ Day holiday on Monday, it looks to continue that trend lower on Tuesday.

The big question though is, why did Nvidia sell up?

Frankly I think Nvidia sold because it made a massive profit on the stock. Remember, as the price peaked just shy of $25 in December, Nvidia was offloading.

Great trading by its team!

It also wasn’t the only company Nvidia offloaded. Based on its F-13 filing from the previous quarter, the company also sold its holdings in Nano-X Imaging and Serve Robotics.

But in selling off some stock, Nvidia also added others.

Nebius Group N.V. (NBIS) is a Dutch company that’s “building infrastructure for the AI revolution”. Its stock was up 6% in trading after the Nvidia news filtered through.

WeRide (WRD) is an autonomous driving company that develops tech for the self-driving vehicle industry. Its stock was up 83% after the Nvidia news dropped.

Are these two on a trajectory higher after the disclosure of Nvidia’s involvement? It looks like WeRide got the full “SoundHound treatment” from the market, Nebius not as much… but I wonder of the two which ends up as the better long-term investment.

I’ll take some time to get to know these two and let you know exactly what they do and why a company like Nvidia has decided to load up on them both.

But these are definitely worth keeping an eye on if the story of SoundHound decides to repeat itself over the next 12 months.

DeepSeek shake-up: AI stocks at a rare discount

China’s DeepSeek sent shockwaves through AI stocks, triggering a market sell-off – but smart investors see the real opportunity. This isn’t a collapse; it’s the next phase of AI growth.

DeepSeek’s breakthroughs are open source, meaning tech giants like Microsoft, Meta and Nvidia can now scale AI faster and cheaper. I’ve been tracking the stocks I believe are best positioned to thrive – and thanks to this market overreaction, they’re available at a discount.

Click here to see how you could take advantage before the market rebounds.

Capital at risk.

Boomers & Busters 💰

***US markets were closed on Monday for Presidents’ Day so with no trading there’s no change in the weekly Boomers & Busters.***

From the hive mind 🧠

I’ll have more to say on this tomorrow, but I think we’re going to reach a tipping point where highly successful businesses will have a point of differentiation that they don’t use any AI in their services. By humans, for humans.
To be honest, when I saw the picture of this bird, I thought it was AI generated! But from saving hedgehog populations to discovering the existence of rare birds in Australia, AI does have some optimistic benefits too.
It’s a race to open source it seems. With the release of DeepSeek’s impressive open-source AI tools, the rest of the AI world has decided this technology is something to keep under wraps. Now Perplexity is getting in on the action with its own free “deep research” tools.