While the AI arms race may be somewhat controversial in and of itself, I think we can all agree that no one wants AI hallucinations. That’s what SoundHound (NASDAQ:SOUN) is out to stop, and with Alibaba (NYSE:BABA) poised to roll out its own chatbot, that’s sending SoundHound shares surging. SoundHound jumped 8.3% in Monday’s trading session, mainly thanks to that new potential connection.
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There’s no specific news out around SoundHound, which has some analysts scratching their heads over what sent SoundHound shares on such an upward ride. SoundHound is most widely known for its music recognition tools, but there’s a lesser-known feature that might play well with new AI developments like Alibaba’s new chatbot. SoundHound is using ChatGPT in its Chat AI apps—for both iOS and Android, based on reports from SoundHound itself—to prevent what are called “AI hallucinations.”
AI hallucinations sound somewhat more dire than they are. SoundHound’s systems will be able to choose “the best answer” for whatever questions it’s asked, whether it needs to turn to Large Language Models, or go beyond these systems to Generative AI. More specifically, SoundHound will turn to a proprietary language known as CaiLAN, or Conversational AI Language, that will help it better interpret what’s asked of it. Ultimately, this should produce better results and make it more attractive to potential users. Especially large-scale Chinese e-commerce sites like Alibaba.
As exciting as this sounds, insider trading at SoundHound suggests that insiders aren’t holding out much hope this will work. In the last three months, insiders sold a combined total of $817,200 worth of shares. That’s sufficient to move insider sentiment to Very Negative.
