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Valued at a market cap of $8.4 billion, SoundHound AI (SOUN) specializes in conversational artificial intelligence technology. It develops voice-enabled solutions that allow businesses to create sophisticated voice assistants. The company provides essential tools for building voice-powered interfaces through its flagship Houndify platform. These tools include speech recognition, natural language processing, and text-to-speech capabilities.
SoundHound’s product portfolio allows businesses across multiple industries to integrate voice-interactive features into their products and services. This effectively enables customers to engage with brands through natural conversation. The company’s technology can be embedded into various devices and systems, making it a versatile solution for businesses looking to modernize customer interactions with AI-powered voice capabilities.
The AI stock has been on an absolute tear in 2024, gaining a monstrous 825% in the year to date. It is capturing Wall Street’s attention amid growing excitement for AI-powered solutions. Let’s see if you should buy the AI stock at current prices.
Analysts Are Bullish on SOUN Stock
SoundHound AI has almost tripled investor wealth since its initial public offering in 2022. While SoundHound remains unprofitable, it has showcased promising growth prospects, expanding the top line by 89% year-over-year to $25.1 million in the third quarter of 2024.
SoundHound AI has raised its revenue projections, igniting bullish analyst sentiment. For instance, H.C. Wainwright raised its price target on SOUN stock to $26, which is higher than the current trading price near $19 and its all-time high of $24.98, set earlier in December.
Of the six analysts covering SOUN stock, four recommend a “Strong Buy” and two recommend a “Hold.” The average target price for the AI stock is $12.92, indicating potential downside of almost 50% from current levels.
Is SoundHound AI Stock a Good Buy?
A key reason for SoundHound’s market-thumping performance in 2024 is its revenue growth. The company forecast revenue between $82 million and $85 million in 2024 and revenue between $155 million and $175 million in 2025. That far outpaces its revenue of $45.9 million in 2023 and $31.1 million in 2022. It also plans to end 2025 with positive adjusted EBITDA.
Over the past year, SoundHound has significantly reduced its customer concentration. For example, its top customer accounted for 12% of sales in Q3 of 2024, down from 72% in the year-ago period. The company has partnered with seven of the top 20 quick-service restaurants and handled over 6 billion queries in the last 12 months, up 100% year over year.
SoundHound’s AI technology has proven successful in real-world applications, as evidenced by its partnership with Apivia Courtage, where its AI agents handled over 100,000 customer service calls and reduced direct queries by nearly 20%.
During its Q3 earnings call, SoundHound emphasized it is partnering with Nvidia (NVDA) to bring voice-generative AI to vehicles without cloud connectivity, unlocking another revenue stream.
Analysts expect SoundHound AI to grow sales from $46 million in 2023 to $200 million in 2026. Comparatively, its losses per share are forecast to narrow from $0.40 in 2023 to $0.20 in 2026. So, priced at 44x forward sales, SOUN stock trades at an extremely lofty multiple in 2024 and remains a high-risk investment despite strong growth prospects.
