The Surprise Winner of the iPhone 4S

Updated

"If I can just hear your pretty voice
I don't think I need to see at all --
Don't think I need to see at all."
-- "Dead Leaves and the Dirty Ground," by The White Stripes

Jack White would settle for Meg's voice if he couldn't see her. When Apple (NAS: AAPL) introduced sweet little Siri with the iPhone 4S, she gave everyone a reason to touch less but talk and listen more.

What fellow Fool Evan Niu calls the new iPhone's only revolutionary feature also happens to be an investable entity. Behind Siri's sensitive ear sits voice-recognition technology from Nuance Communications (NAS: NUAN) , and Siri makes the company look good.

Since the iPhone 4S was introduced, Nuance shares have gained 19%. The stock is breaking all-time highs on a daily basis. About half of the boost has come after hands-on reviews of the new feature started rolling in. If you bought Nuance when our flagship Stock Advisornewsletter recommended it last year, you've got a 50% jump so far.

And if you're really old-school, holding on to a batch of Nuance shares since the original recommendation by the Motley Fool Hidden Gemsteam, your investment has more than tripled. That's one polished little gem!

The first iPhone upended our expectations for what phones can do by introducing a slick touchscreen interface. Shares of touchscreen-tech specialists Cypress Semiconductor (NAS: CY) and Atmel (NAS: ATML) have absolutely crushed the market by riding the coattails of Apple's innovation (and Google's (NAS: GOOG) , and even Research In Motion's (NAS: RIMM) until the Canadians forgot how to innovate).

The voice-driven revolution is just getting started and should be just as drastic as the touch-powered sea change. Mangling audio data is simply harder than tracking fingers sliding across a screen, what with all the accents, background noise, and complexities of understanding human languages. Expect a lot more of this technology in the near future -- and for the long haul. Every breath that's in Nuance's lungs is a tiny little gift to investors.

So Nuance is off to a great start, but the growth story is just getting started. Smartphones outsell PCs nowadays, and their projected growth rate in the coming years looks staggering. Nuance is one way to ride that trend; audio-chip expert Cirrus Logic (NAS: CRUS) , which plays an important part in Siri's powers, is another. In our free report "5 Stocks The Motley Fool Owns -- and You Should, Too," we highlight yet another mobile leader that our analyst believes is one of the strongest ways to profit in smartphone growth in China and beyond. Get your copy of the report -- it's free!

At the time thisarticle was published Fool contributorAnders Bylundowns shares of Google but holdsno other position in any of the companies discussed here. The Motley Fool owns shares of Apple, Google, and Cirrus Logic.Motley Fool newsletter serviceshave recommended buying shares of Cypress Semiconductor, Apple, Nuance Communications, and Google and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement