Over the past two years, unusually high inflation combined with rising borrowing costs have caused some companies to focus more on their internal efforts and push back on any ideas for acquisitions or special projects.
But now that inflation is slowing and the Federal Reserve has begun cutting interest rates, corporate balance sheets are strengthening.
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Besides, I think it’s only a matter of time before Federal Trade Commission FTC Chair Lina Khan resigns before President-elect Trump takes oath of office. One of my top predictions for 2025 is: mergers and acquisitions will see a comeback against a backdrop of improving macroeconomic conditions and a high likelihood that FTC leadership will change under the new administration.
One company that I consider to be an attractive candidate for acquisition is AI SoundHound (NASDAQ: SOUN), specializing in speech recognition assistants powered by artificial intelligence (AI). Below, I’ll detail why speech recognition is an important part of the AI ecosystem and explore why SoundHound AI seems like a logical acquisition prospect.
Voice AI uses natural language processing (NLP) and machine learning to train devices to understand and process words and phrases. Common applications of this technology include Internet of Things (IoT) devices such as smart thermostats or assistants such as AmazonIt’s Alexa.
The AI built into these tools can help you set reminders, get general information by asking a question, or even change the temperature throughout your home, all by leveraging your voice and removing any manual steps or intermediate physics.
According to Statista, the global total addressable market (TAM) for voice recognition is estimated to be worth $15.9 billion by 2030, a little more than double its current value.
While there is a clear demand for AI-based speech recognition, which companies are actually investing in this technology? The answer might surprise you.
Besides Amazon, the companies listed below have invested significantly in AI voice assistants in recent years:
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Alphabet: Similar to Amazon, it also offers a range of smart home products. The company’s Google Home devices are essentially a direct competitor to Amazon’s Alexa, while the company’s smart home products including speakers, thermostats, doorbells and locks, and more , are sold under its Nest brand.
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Microsoft: A few years ago, the company acquired an AI speech recognition developer called Nuance for nearly $20 billion. Nuance has gained ground in a few crucial end markets, but has primarily focused on healthcare. For Microsoft, the deal represented an opportunity to leverage a new type of technology while allowing the company to sell its various services, particularly its Azure cloud computing infrastructure, to large organizations already working with Nuance. Its partner OpenAI has also been experimenting with voice-controlled AI tools. Although it’s still early days, Microsoft appears to be well positioned in the speech recognition segment of the AI landscape.
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Apple: The company’s main foray into voice recognition is through its AI assistant, Siri. It is built into all Apple hardware products and can understand users’ voices to answer questions and perform basic tasks such as scheduling. Several years ago, Apple also acquired Shazam, an application capable of processing musical lyrics and generating information such as artist, album and song name.
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Nvidia: The company is perhaps the most peripheral player among big tech when it comes to voice recognition software. According to its 13F filings, Nvidia owns a small stake in SoundHound AI through an investment it made in the company while it was still private.