When McDonald’s (NYSE: MCD) recently announced that it was ditching its artificial intelligence (AI)-powered voice ordering technology powered by International Business Machines (NYSE: IBM), it left many wondering what impact this decision could have on SoundHound AI (NASDAQ: SOUN), a company making waves in the restaurant space with its voice-powered AI technology.
McDonald’s surprising move to end its partnership with IBM for automated order-taking technology after a two-year trial raises questions. The fast food chain had sold IBM the technology powering the solution back in the fall of 2021, after acquiring an AI voice start-up called Apprente in 2019. The voice-ordering technology, which was operational at over 100 locations, faced some viral mishaps like adding ketchup packets to a sundae order.
With McDonald’s now exploring alternative voice ordering solutions, SoundHound emerges as a potential replacement for IBM. SoundHound’s AI-powered drive-thru voice ordering technology has gained traction in the restaurant sector. The company’s Smart Ordering platform and Employee Assist solution have been implemented by major quick-service restaurant chains, positioning SoundHound as a strong contender for the McDonald’s deal.
While SoundHound is a frontrunner, other competitors like Wendy’s, using Alphabet’s Google Cloud for its Fresh AI platform, and QSRs employing various solutions from companies like Presto Automation and Valyant AI are also in the mix. Despite Google Cloud’s existing agreement with McDonald’s, if SoundHound offers a superior solution, it could secure the partnership.
Investors eyeing SoundHound stock should consider the potential impact of a deal with McDonald’s. Although trading at a premium P/S ratio, SoundHound’s rapid revenue growth and promising business backlog signal a bright outlook. Partnerships with industry giants like McDonald’s demonstrate SoundHound’s potential for significant growth in the voice AI space.
The decision to invest in SoundHound AI should be considered carefully, given the company’s valuation and growth phase. With McDonald’s deal looming as a catalyst for SoundHound’s stock, investors should weigh the risks involved while recognizing the company’s potential for substantial returns.
As The Motley Fool’s Stock Advisor analysts continue to identify top-performing stocks, investors should stay informed about SoundHound’s progress and market potential. With SoundHound’s position as a key player in the voice AI industry, the stock’s performance could be driven by major partnerships and technological advancements.
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