Why SoundHound AI, BigBear.ai, and Other Artificial Intelligence (AI) Stocks Tumbled This Week

This was a big week for artificial intelligence (AI) aficionados. The hot ticket was Nvidia‘s (NVDA 1.18%) GPU Technology Conference (GTC), which has been called the “Woodstock of AI.” According to reports, some of the biggest names in technology were on hand while millions more joined the festivities online.

CEO Jensen Huang gave the keynote address, which included a rundown of the company’s latest AI-centric creations. Investors had plenty to digest, which weighed on many AI stocks throughout the week.

With that as a backdrop, conversational voice specialist SoundHound AI (SOUN -15.76%) cratered 25% this week, BigBear.ai (BBAI -3.72%) slumped 15.2%, and AI-centric server maker Super Micro Computer (SMCI 8.38%) tumbled 9.1% as of the market close on Thursday, according to data supplied by S&P Global Market Intelligence.

A check of all the usual suspects — regulatory filings, financial reports, and changes to analysts’ price targets — was mixed in terms of company-specific news, with both good and bad developments (more on that in a bit). But it was Nvidia’s flagship event that drove sentiment for much of the week.

A robotic hand interacting with a visual AI touchscreen display.

Image source: Getty Images.

The world’s most powerful AI chip

Nvidia introduced its next-generation Blackwell architecture, the heir apparent to its wildly successful Hopper processors, which have become the go-to for AI processing. Huang described the B200 graphics processing unit (GPU) as the “world’s most powerful chip” for AI. Its top-tier processor — the GB200 Superchip — integrates a Grace CPU and two B200 processors on one board. To make the platform even faster, Nvidia created the new NVLink network switch chip, which expedites communication between the chips, freeing up the main processors to focus on AI.

The Blackwell chips will be available in a wide variety of configurations from individual GPUs up to complete rack-scale systems for data centers and everything in between.

There were a number of company-specific developments that came out of GTC:

  • Super Micro Computer, commonly referred to as Supermicro, announced the launch of three “Nvidia-based, full-stack, ready-to-deploy generative AI” systems that are turnkey ready for processing AI workloads.
  • SoundHound AI revealed it would offer on-chip voice AI on the Nvidia Drive Platform that will deliver in-vehicle generative AI responses, even without a connection to the internet.

Other developments

Beyond the announcements made in conjunction with GTC, there were other company-specific events — both positive and negative — that added to the volatility.

  • Supermicro joined the S&P 500 on Monday, which the company said was an acknowledgment of the remarkable growth of its sales and market cap.
  • Supermicro sought to take advantage of its growth with a secondary stock offering of 2 million shares of common stock, which was expected to raise roughly $1.75 billion.
  • A short report by Capybara Research charged that SoundHound AI was “a failing company peddling lies and deception.” It raised a number of valid concerns, which caught the attention of investors, sending the stock tumbling.
  • One of Wall Street’s finest also soured on SoundHound. Analysts at Cantor Fitzgerald issued a rare double downgrade to underweight (sell) this week while assigning a price target of $4.90, roughly 38% below Wednesday’s closing price. The analysts said the “valuation cannot be justified” while also raising some of the same concerns as the short report.

Only one of these stocks is a clear buy

In terms of valuation, Supermicro and BigBear.ai are equally inexpensive, both sporting a forward price-to-sales ratio of roughly 2, while SoundHound AI sells for 20 times forward sales. It’s also worth noting that SoundHound AI and BigBear.ai have yet to generate a profit. This makes Supermicro the clear investment choice among the three.

Danny Vena has positions in Nvidia and Super Micro Computer. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

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