Tech companies are cashing in on the artificial intelligence (AI) boom, with first-quarter results showing surging demand for everything from voice assistants to cloud computing. The AI gold rush is lifting sales and profit at specialists like SoundHound and Nvidia and more prominent players like Microsoft and Baidu, highlighting the technology’s growing impact across industries.
SoundHound said first-quarter results reflect a booming interest in voice-based AI, especially for customer service.
“Our first quarter sets the tone for 2024 as another year of strong growth for SoundHound,” CEO Keyvan Mohajer said May 9 in a news release. “Voice AI is fast becoming a must-have tool for customer service, and that’s reflected in the demand we’re seeing for subscriptions.”
The Santa Clara, California, company reported revenue of $11.6 million, up 73% from a year earlier. On a call with analysts, Mohajer said SoundHound’s two decades of experience give it an edge in the crowded AI race.
“As an AI company, we combine our 20+ years of technology innovation and billions of customer interactions to create the best voice AI technology on the market,” he said. “Across automotive and customer service, global brands are increasingly looking to us to provide an exceptional experience.”
SoundHound makes money through subscriptions and bookings, which reached a backlog of $682 million, up about 80% from the prior year. The company said its voice AI handled over 4 billion queries in the quarter, a 60% increase.
CFO Nitesh Sharan touted the results as SoundHound’s “strongest Q1 ever,” noting momentum from a growing pipeline across all business lines.
In the quarter, SoundHound closed its acquisition of SYNQ3, making it the most prominent voice AI provider for restaurants with over 10,000 active locations. Its technology is being used by major brands, including Applebee’s, Church’s Chicken and Planet Fitness franchises.
SoundHound partnered with Nvidia on the automotive front to bring generative AI to cars without internet connectivity. Its Chat AI product is ramping up with Stellantis brands like Opel, Peugeot and Alfa Romeo.
SoundHound reported a net loss of $33 million, or 12 cents a share, on a GAAP basis. Its cash balance stood at $226 million.
Nvidia shares broke out Wednesday morning (May 15), surging past a critical technical level that could signal further gains. The stock cleared a so-called cup-with-handle pattern at $922.20, a closely watched buy signal among traders. The move comes as Nvidia’s stock has been consolidating recently, with investors keenly eyeing a potential run to $974 or beyond.
In February, Nvidia reported fourth-quarter earnings that exceeded expectations, with $22.1 billion in revenue compared to the forecasted $20 billion. This represented a 265% year-on-year increase and 22% higher than the previous quarter. Nvidia’s data center revenue was up more than 400% from the same period in 2023, reaching $18.4 billion.
Nvidia makes computer chips that power AI systems. Its graphics processing units accelerate the training of machine-learning models.
Microsoft unveiled plans Monday (May 13) to invest $4.3 billion into French technology. The funds will go toward cloud computing, AI training and startup support to secure 1 million people and bring back 2,500 AI ventures by 2027.
“In this Year II of generative artificial intelligence, and as it has already entered the age of reason, we are proud to announce today a historic investment in France,” Corine de Bilbao, corporate vice-president, Microsoft France, said in a news release. “Through state-of-the-art cloud and AI infrastructure, a major training plan for the French, and renewed support for startups in the hexagon, we are pursuing our commitment to sustainable and inclusive growth.”
Baidu posted better-than-expected results for the first quarter, as the Chinese tech giant’s investment in artificial intelligence helped offset softer online advertising sales.
The Beijing-based company said revenue rose 1% to 31.5 billion yuan ($4.37 billion) for the three months ended March 31. Net income fell 6% to 5.4 billion yuan.
Baidu’s core business, which includes its flagship search engine and AI initiatives, saw revenue climb 4% to 23.8 billion yuan. The company’s AI Cloud unit was a bright spot, with revenue rising 6%.
“As a new era of Gen-AI unfolds in China, foundation models like ERNIE will serve as the underlying infrastructure,” Robin Li, Baidu’s co-founder and CEO, said in a news release. Baidu has been expanding its ERNIE family of large language models, aiming to make the technology more affordable and efficient.
The results highlight Baidu’s progress in pivoting from online advertising to AI-powered services and products.
DigitalOcean Holdings posted first-quarter results that CEO Paddy Srinivasan called “solid across the board,” as the cloud-computing company saw accelerating revenue growth and strong margins.
Revenue rose from the fourth quarter, while adjusted earnings and free cash flow remained robust. DigitalOcean’s core product usage and net dollar retention rate also improved.
“Our Q1 results are very encouraging,” Srinivasan said on an investor call. The CEO, who took the helm in January, said he spent much of the quarter engaging with customers, partners and employees.
DigitalOcean, which caters to small and midsize businesses, is investing in artificial intelligence and machine learning offerings. Srinivasan said advances in AI are expanding the market for cloud platforms.
The company has been stepping up its product rollouts, launching features like automated data backups, special-purpose computing instances and AI tools. DigitalOcean reported a profit of 15 cents a share, missing analysts’ estimates.
As the AI race heats up, investors will be closely watching the tech giants’ next moves. With billions of dollars pouring into the sector and new breakthroughs emerging rapidly, the companies that can best harness the power of artificial intelligence look poised to reshape the business landscape. The question now is who will emerge as the winners in this high-stakes battle for AI supremacy.
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