Cramer identifies Cerence Inc. as a hidden gem in the AI era

Cerence Inc. (CRNC) is a software company that caters to the transportation industry. Its shares have gained 60% year-to-date and 45% in August, benefiting from AI deals like a partnership with Mercedes-Benz. Jim Cramer discussed the firm as a hidden gem in the AI era, citing its technology as being better than that of big companies. While CRNC has potential, some AI stocks are believed to hold greater promise for delivering higher returns and have limited downside risk.

Cerence Inc. (CRNC), a software company specializing in the transportation industry, has seen significant growth in its stock price, with shares gaining 60% year-to-date and 45% in August [2]. This surge is attributed to the company's strategic AI deals, notably its partnership with Mercedes-Benz [1]. Cerence's technology, according to CEO Brian Krzanich, is more advanced than that of big companies, positioning it as a hidden gem in the AI era [1].

Cerence's partnership with Mercedes-Benz includes a virtual AI assistant with a "living" avatar that takes the form of the Mercedes-Benz star logo. This technology aims to deliver more natural and empathetic interactions, responding to the user's voice in varying emotional speaking styles [1]. The company's AI technology is integrated into all its products, with large language models playing a key role in their performance [1].

While Cerence shows promise, Jim Cramer has expressed that some AI stocks hold greater potential for higher returns and limited downside risk [2]. SoundHound AI, for instance, reported a 217% year-over-year increase in Q2 revenue, driven by breakthroughs in automotive, enterprise, and restaurant verticals [3]. SoundHound's competitive edge lies in its proprietary technology, embedded AI, and vertical specialization, which differentiate it from tech giants like Amazon and Cerence [3].

For investors, Cerence Inc. offers a compelling opportunity in the AI space, but it is essential to monitor the company's gross margin trajectory and voice commerce adoption to assess its long-term potential. While Cerence has made strides in AI integration and strategic partnerships, its success will depend on its ability to maintain its momentum and improve gross margins [1, 2, 3].

References:
[1] https://www.cnbc.com/2025/08/11/cerence-ai-ceo-explains-how-new-tech-can-help-drivers.html
[2] https://finance.yahoo.com/news/cerence-inc-crnc-might-hidden-210101086.html
[3] https://www.ainvest.com/news/soundhound-ai-q2-earnings-surge-inflection-point-voice-ai-adoption-2508/