Is It Time to Buy SoundHound?

It’s looking increasingly likely that the artificial intelligence (AI) boom could extend into 2025 as new applications and advancements come to light. And while I view the Magnificent Seven companies as primed to continue winning for investors, I think a whole new class of lesser-known AI companies could rise to glory. Of course, it’s tough to spot the relative unknowns until they’ve had an already sizeable surge behind them. But just because a stock has had a run doesn’t necessarily mean it’s bound for a painful crash.

Either way, investors should exercise caution when searching for the shares of AI companies that aren’t yet pulling in a profit. Sure, encouraging technologies and other unique advantages may be worth backing. However, unless you can value a firm or evaluate its future expected cash flows based on your view of its growth narrative, you should expect nothing short of a wild and turbulent ride.

In the case of voice AI firm SoundHound AI (NASDAQ:SOUN), many investors have already recognized the profound potential behind the company’s intriguing platform. Undoubtedly, conversational AI represents a massive, potentially underrated corner of the AI software scene. As more attention spreads from hardware to software, it’s names like SoundHound that could be bid higher as investors better recognize the potential total addressable market (TAM) the firm could capture.

Key Points About This Article

• SoundHound AI is a massive winner on the year. Some analysts think there’s still more upside ahead.
• As more firms find ways to monetize the technology, SOUN stock may just grow into its lofty multiple.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

SoundHound AI: A mid-cap star that exploded onto the scene

Of course, where there are massive economic opportunities, there will surely be a growing number of rivals. Though SoundHound is bound to run into some serious rivals in the voice AI scene over time, the company’s Houndify and Amelia offerings seem to be a cut above that of rivals.

There’s a reason why the firm has teamed up with some huge names in a broad range of industries, including quick-serve restaurants that seek to use SoundHound’s Voice AI in its drive-thrus. And, of course, SoundHound has rubbed shoulders with the great Nvidia (NASDAQ:NVDA), the one partnership that put the firm on the map.

In any case, it’s hard not to get excited about Houndify and its potential as firms across the industry look to monetize voice AI. Every partnership the firm makes could add more heat to the scorching rally that’s propelled SOUN stock up more than 900% year to date. Even Wednesday’s Fed-induced market plunge wasn’t enough to scare investors out of SOUN shares, which rose 7.5% on a day the Nasdaq 100 crumbled 3.6%.

Clearly, investors are enthused about the voice AI market in the new year. With Apple (NASDAQ:AAPL) Intelligence stealing the show following its latest iOS 18.2 launch, which included an updated Siri, it’s clear that consumer desire for truly next-generation conversational AI experiences is there.

Though I’m awed by the opportunity ahead, I can’t say I’m as bullish as some of the Wall Street pros covering the $7.7 billion AI up-and-comer.

Some Wall Street pros don’t think it’s too late to buy

Recently, Wedbush Securities’ Dan Ives more than doubled his price target from $10.00 per share to $22.00 while maintaining his buy (or outperform) rating. Why the huge target hike? Ives views the company as an “under-appreciated pure-play AI company” that’s “in the early stages of capitalizing on its growth initiatives.”

That’s some incredibly encouraging commentary from one of the most forward-thinking analysts on Wall Street. Undoubtedly, the TAM for SoundHound’s voice AI could have the potential to be unfathomable when you consider the potential applications beyond drive-thru ordering. Like Nvidia (NASDAQ:NVDA), SoundHound is starring at a potentially massive market opportunity that may very well justify its explosive rally and its seemingly expensive valuation.

If there’s a firm that can grow into a pie-in-the-sky multiple (close to 89 times price-to-sales), it’s SoundHound, a firm that could make a great speculative pick-up for those who can handle the extreme volatility. Just how extreme? The beta sits at 3.04, entailing amplified correlation to the broad stock market. Indeed, that’s the highest beta I’ve seen in a long time!

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