Why SoundHound AI, Nvidia, and Other Artificial Intelligence (AI) Stocks Rallied Today

There’s little question that the catalyst that sparked the current bull market rally is artificial intelligence (AI). The AI gold rush that kicked off last year is gathering steam, but market watchers continue to question the resilience of this upward momentum. However, robust results from one company provided a lift for a number of AI stocks.

With that as a backdrop, audio AI specialist SoundHound AI (NASDAQ: SOUN) surged 13.6%, chipmaker Nvidia (NASDAQ: NVDA) climbed 4.9%, and social media maven Meta Platforms (NASDAQ: META) climbed 2.4%, as of 1:47 p.m. ET.

A check of all the usual suspects — financial reports, regulatory filings, and changes to analysts’ price targets — turned up nothing in the way of catalysts to explain the move higher. This seems to suggest that it was the results of another company that drove AI stocks upward.

Image source: Getty Images.

Evidence the adoption of AI is spreading

The catalyst that seems to have sparked a rally among AI stocks was a surprisingly strong earnings report from database specialist Oracle (NYSE: ORCL). The results provided evidence that demand for AI is spreading.

For its fiscal 2024 third quarter (ended Feb. 29), Oracle reported revenue of $13.3 billion, which grew 7% year over year, resulting in adjusted earnings per share (EPS) of $1.41, up 16%. While that might not seem like much to write home about, the devil is in the details, with two items of particular interest.

Oracle’s cloud revenue was the headliner, growing 25% year over year to $5.1 billion. Even more impressive was the company’s cloud infrastructure results, which climbed 52% year over year. This outpaced the growth of Amazon Web Services, Alphabet‘s Google Cloud, and Microsoft Azure — also known as the “Big Three” cloud providers — which grew 13%, 26%, and 30%, respectively. This suggests that either Oracle took market share from its closest cloud competitors, or that demand for cloud services is growing — though both could be true.

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Furthermore, the company’s remaining performance obligation (RPO), or contractually obligated sales…

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