SoundHound AI SOUN shares have skyrocketed by 27.3% in the last month, outshining the dismal 6.4% fall in the Zacks Computer & Technology sector and the modest 5.2% uptick in the Zacks Computers – IT Services realm.
SoundHound AI is basking in glory thanks to its robust portfolio, extensive partner network, and expanding client base. Offering conversational intelligence globally in 25 languages across cloud-based and hardware-embedded devices, SOUN occupies a unique niche in the tech landscape.
The company’s growth prospects are underpinned by a colossal addressable market valued at over $140 billion, spanning various sectors such as automotive, dining, customer service, entertainment, Smart TVs, and Internet of Things (IoT) devices.
As of Q1 2024, SoundHound AI boasted a solid $682 million in cumulative subscriptions and bookings backlog, surging 80% year over year, with an average contract duration of seven years. This phenomenal backlog reflects the burgeoning demand for SOUN’s cutting-edge solutions.
With projected revenues ranging between $65 million and $77 million for 2024, SoundHound AI is on a growth trajectory. Analysts’ consensus for SOUN’s 2024 revenues stands at $71.01 million, representing a substantial 54.8% year-over-year surge. Moreover, the projected loss for 2024 is 30 cents per share, narrowing by three cents in the past month.
The Sonic Trajectory of SoundHound AI
SoundHound AI, Inc. price-consensus-chart | SoundHound AI, Inc. Quote
Forecasting a revenue milestone surpassing $100 million and positive adjusted EBITDA in 2025, SOUN is positioning itself for continued growth and market dominance.
In the upcoming year, analysts anticipate SOUN’s 2025 revenues to hit $103.91 million, showcasing a robust year-over-year growth of 46.3%. The consensus for the 2025 loss stands at 18 cents per share, narrowing by four cents within the latest month.
SOUN Stock Strikes a Chord in 2024
Year-to-date, SOUN shares have surged by a remarkable 133.5%, outpacing the broader Zacks Computer & Technology sector’s 16.5% return and the Zacks IT Services industry’s gain of 0.9%.
Notably, SoundHound AI has outperformed key industry rivals such as ServiceNow, Infosys, and Vertiv. These companies have recorded gains of 13.1%, 23%, and 52.1%, respectively, over the same period, underscoring SOUN’s dominant performance and market standing.
Tuning Into Valuation Metrics
While SoundHound AI’s stock is riding high, caution is warranted as its Value Style Score of F implies a stretched valuation presently.
Trading at a forward 12-month Price/Sales ratio of 18.14X, SOUN’s valuation exceeds both its median of 8.85X and the Zacks Computer & Technology sector’s 6.18X ratio.
Harmonizing Growth Through Expansion
SoundHound AI’s growth trajectory is fueled by its expanding presence in key sectors like automotive and dining, driven by its innovative product suite. With a portfolio boasting over 270 patents, including 155 granted and 115 pending, SOUN stands as a beacon of innovation in the realm of Voice AI.
The automotive segment presents a significant growth avenue for SOUN, with the global light vehicle auto market’s Total Addressable Market (TAM) pegged at around 88 million units currently, set to reach 95 million units by 2028.
Building on its automotive success, SOUN has integrated its advanced SoundHound Chat AI voice assistant, powered by ChatGPT, into Peugeot, Opel, and Vauxhall vehicles across 11 European markets. This strategic move underscores SoundHound AI’s commitment to innovation and market expansion.
Collaborations with industry leaders like NVIDIA, ARM, Perplexity, Olo, and Oracle further bolster SOUN’s product range. The recent launch of an advanced in-vehicle voice assistant leveraging NVIDIA DRIVE showcases SOUN’s commitment to cutting-edge, real-time AI capabilities for enhanced user experiences.
Through partnerships, such as the one with Perplexity, SOUN enhances its SoundHound Chat AI with advanced real-time voice assistant responses, showcasing its dedication to delivering state-of-the-art solutions to clients.
With a TAM of roughly $3.3 trillion in the restaurant market, expected to grow to $4.4 trillion by 2028, SoundHound AI is well-positioned to capitalize on the burgeoning dining industry. Collaborations with Olo and Oracle target improved order processing and guest experiences, enhancing SOUN’s foothold in this lucrative market.
SoundHound AI’s acquisition of SYNQ3 has been instrumental in expanding its reach in the restaurant sector, contributing positively to revenue growth and customer base expansion. This strategic move underpins SOUN’s commitment to market leadership and innovation.
Additionally, SoundHound AI’s acquisition of key assets from Allset, an online ordering platform, has augmented its capabilities in Voice AI, further cementing its position as a leading player in the industry.
The Crescendo
SoundHound AI presents a daring yet promising opportunity for growth-oriented investors, navigating the uncharted waters of the Voice AI landscape. With a robust portfolio and promising market outlook, SOUN stands as a formidable contender in the global automotive and restaurant markets.
This Zacks Rank #1 (Strong Buy) stock, boasting a Momentum Style Score of A, offers an enticing investment avenue, as per the Zacks Proprietary methodology.
Make a sound investment decision – should you amplify your financial portfolio with SoundHound AI?
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