SoundHound AI (NASDAQ: SOUN) stock has been a roller coaster. Earlier this 12 months, shares quadrupled after chipmaker Nvidia revealed a $3.7 million investment in the corporate. Since hitting their peak, shares have shed over half their value.
The underlying reality, nonetheless, has been much less volatile. SoundHound has been signing recent customers, securing additional patents, and proving its technology through a growing list of real-world applications.
Will the 12 months ahead be the corporate’s most fun yet? And what is going to it mean for the stock price?
Expect SoundHound to give attention to these three growth opportunities
SoundHound is an early leader within the voice AI technology space. The corporate already has greater than 270 patents covering all the pieces from speech recognition to natural language processing. But the corporate has patented greater than just its AI technology — it has also legally protected the way in which it integrates with use cases. For instance, the corporate has dozens of patents that cover the way in which its technology augments promoting platforms, consumer electronics, and music services.
SoundHound continues to advance its underlying technology, however the 12 months ahead will likely be all about securing additional customers. On this front, the corporate already has a formidable start. In 2016, it essentially had zero major customers. Then, from 2017 to 2021, it signed dozens of contracts with global businesses, including Qualcomm, Honda, Hyundai, Snap, Pandora, and Vizio. More recently, it added recent customers in additional categories resembling restaurant operators (Applebee’s, White Castle, and Chipotle) and tech giants (Oracle and Block).
Over the subsequent 12 months, expect it so as to add much more customers in three key categories: consumer products like vehicles and televisions, services like reservations and food ordering, and monetization opportunities in things like promoting and marketing platforms. SoundHound already has customers piloting its technology in each of those three categories. Nevertheless it should give you the chance to make use of the success of those real-world applications to sign additional customers, adding much more opportunities to further train its models, acquire more data, and prove its technology to potential adopters.
If it gets this network effect began, SoundHound could turn into the most important player within the voice AI industry, which the corporate believes could at some point be price $140 billion or more.
Is SoundHound stock a buy at once?
The AI voice technology industry continues to be in its early phases, but investors are already seeing what tech giants consider this industry. In 2022, Microsoft acquired voice AI company Nuance for nearly $20 billion. This 12 months, Apple announced a large partnership with OpenAI that may greatly advance its AI capabilities, including that of its virtual assistant, Siri.
Over the past 12 months, SoundHound has generated $50.8 million in revenue. For full-year 2024, management expects revenue to land between $65 million and $77 million. For next 12 months, analysts estimate revenue will jump to just about $104 million. This strong growth has led Wall Street to offer the stock a median price goal of $7.43, an 88% premium to the present share price.
SoundHound’s growth trajectory is actually headed in the correct direction, but it surely won’t be the subsequent few quarters that make or break the corporate. And short-term price targets fairly often miss the mark, especially for early-stage firms like this.
The principal point is SoundHound should turn into a stronger company over the 12 months to return. It must have more patents, more customers, and more revenue. Shares will likely be volatile within the face of short-term analyst expectations and general market sentiment, but SoundHound investors must be taking the long view.
While the stock carries a lofty valuation of 19 times sales, SoundHound’s overall market cap of $1.3 billion continues to be attractive relative to its long-term potential, especially when put next against historical voice AI acquisitions like Nuance’s $20 billion buyout.
The 12 months ahead must be very positive for SoundHound from a business standpoint. Nevertheless it’s the last decade ahead that may ultimately determine whether buying shares today pays off. In the event you’re willing to just accept the high-risk, high-reward proposition, SoundHound is an important pick for growth-focused investors in search of maximum upside potential.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Apple, Block, Chipotle Mexican Grill, Microsoft, Nvidia, Oracle, and Qualcomm. The Motley Idiot recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
Where Will SoundHound AI Be in 1 Yr? was originally published by The Motley Idiot