When a business isn’t currently profitable, it might be difficult to assign a price since an organization without earnings won’t have a price-to-earnings (P/E) ratio. Thus, in terms of an organization like SoundHound AI (NASDAQ:SOUN), prospective investors must find other ways to judge it.

More accurately, investors should consider what the corporate could be value in a yr, five years or longer. That’s particularly the case with SoundHound AI since artificial-intelligence (AI) stocks are inclined to be measured based on the expected growth of generative-AI adoption.

This makes valuing SoundHound AI all of the tougher, but not less than there’s recent data to think about. At the tip of the day, forward-thinking investors could also be willing to forgive the corporate for its current lack of profits — in the event that they envision continued growth in the approaching quarters.

A selected and possibly untapped AI area of interest

The gen-AI movement of the past couple of years began with high-school students determining that they might use OpenAI’s ChatGPT website to immediately produce essays that may pass plagiarism checkers. It wasn’t long before practically every big business began to feel the necessity to integrate generative AI and brag about it on their conference calls.

Almost immediately, stock traders began on the lookout for area of interest AI-market beneficiaries. They identified NVIDIA (NASDAQ:NVDA) stock as the proper play because all of those latest gen-AI applications would require powerful processors.

That’s old news by now, but there’s still a possibly untapped niche-AI industry to look into. I’m not claiming to be Magellan or anything, but I feel just like the market hasn’t really discovered voice-activated AI yet. Essentially the most obvious and direct play for investors on this burgeoning area of interest market is SoundHound AI stock, which focuses on voice-activated AI.

Two uses for voice AI are in vehicles and in internet-ready household objects (also often called the Web of Things, or IoT). For instance, in March, SoundHound AI partnered with global automaker Stellantis (NYSE:STLA), which is predicated within the Netherlands. By utilizing SoundHound AI’s automotive voice assistant integrated with ChatGPT’s gen-AI technology in Stellantis’ vehicles, the 2 corporations collaborated on introducing cutting-edge automotive AI-voice capabilities in Japan.

Earlier this month, SoundHound AI teamed up with conversational AI-powered answer-engine provider Perplexity. Through this partnership, Perplexity will bring its online large language model (LLM) capabilities to the SoundHound Chat AI voice assistant to be used in automobiles and IoT devices.

That is all very exciting, but keep in mind that SoundHound AI stays highly speculative. Yes, there’ll probably be gen-AI voice capabilities in all newly manufactured cars within the near future. SoundHound AI might be the primary to market, especially given its collaboration with Stellantis. Nevertheless, it’s difficult to know if and when this can occur and, just as importantly, whether it is going to translate to quarterly profits for SoundHound AI.

Revenue on the rise, but income is elusive

Let’s see where the info takes us. SoundHound AI’s first-quarter financial press release remains to be fresh, and there’s one data point that definitely stands out.

Impressively, the corporate grew its revenue 73% yr over yr to $11.594 million. One can’t blame SoundHound AI Chief Financial Officer Nitesh Sharan for engaging in some bragging after such a robust first-quarter sales print.

“We were pleased to start out the yr with a strong top-line performance in our strongest Q1 ever,” Sharan stated.

This doesn’t mean SoundHound AI’s financial picture is ideal in every way, nevertheless. On an adjusted, non-GAAP basis, SoundHound AI reported a first-quarter net lack of $19.884 million or 7 cents per share. That’s in comparison with a net lack of $17.141 million or 8 cents per share in the primary quarter of 2023.

It could hassle some investors to find that SoundHound AI isn’t currently income-positive. Yet, it is a common theme amongst start-up businesses involved in emerging area of interest technologies. It’s expensive to operate a pioneer business, and the danger of running out of capital simply can’t be ignored.

However, SoundHound AI stock could eventually double, triple or more if voice-activated AI technology becomes commonplace.

As an illustration, the corporate noted, “Applebee’s has expanded its use of voice-AI ordering across multiple franchisees.”

In other words, there’s just no telling where you would possibly see and listen to SoundHound AI’s products. Due to this fact, for those who’re not a stickler for profitability within the near term, it’s not a terrible idea to purchase a couple of shares of SoundHound AI stock while they’re still under $6.

Disclaimer: All investments involve risk. Under no circumstances should this text be taken as investment advice or constitute responsibility for investment gains or losses. The data on this report shouldn’t be relied upon for investment decisions. All investors must conduct their very own due diligence and seek the advice of their very own investment advisors in making trading decisions.