Predicting SoundHound AI's Advancements in the Next 12 Months
The booming artificial intelligence (AI) market is propelling numerous tech companies forward, and SoundHound AI's (SOUN 8.60%) sturdy stance in voice-enabled products and services is reaping the benefits. Over the past 12 months, SoundHound's stock has skyrocketed over 250%, leaving investors curious about the company's future trajectory. Let's delve deeper into SoundHound's current state and prospective developments in the following year.
SoundHound's Current Status
Recently, SoundHound has expanded its business into new conversational AI markets, boasting over 200 enterprise brands relying on its technology, including heavyweights like Chipotle Mexican Grill, Qualcomm, and Stellantis' automotive brands.
The allure of SoundHound's voice AI platform is undeniable, as depicted in the company's third-quarter results (ending Sept. 30). Revenue surged 89% year-over-year to $25.1 million, surprisingly exceeding analysts' consensus estimate of $23 million. Moreover, SoundHound's non-GAAP loss per share decreased from $0.06 in the year-ago quarter to $0.04, surpassing Wall Street's anticipated loss of $0.08.
SoundHound's third-quarter performance wasn't an isolated instance. The company's revenue growth is likely to persist, with management projecting $83.5 million in 2024 revenue at the midpoint, followed by a substantial increase to $165 million in 2025 [Enrichment Data].
Opportunities and Cautions
SoundHound is already capitalizing on the AI market's expansion, and this trend is expected to carry on as large companies up their AI spending. As per SoundHound's management, businesses are slated to invest between $175 billion to $250 billion in AI enterprise spending by 2027. This promises new growth prospects for SoundHound in the coming year and beyond [Enrichment Data].
Following its acquisition of Amelia, SoundHound will expand its conversational AI reach within finance, healthcare, and insurance markets, tapping into currently untapped potential [Enrichment Data].
However, there are two factors investors should keep in mind. Firstly, SoundHound remains unprofitable. Although losses narrowed in the third quarter, the company's shares trade at an elevated price-to-sales ratio of 35.9, significantly surpassing the S&P 500's average [Enrichment Data].
That's not to say SoundHound's stock doesn't have more room to grow. A bullish outlook on the company's long-term AI market opportunity could justify adding a small position and purchasing more shares during market pullbacks [Enrichment Data].
In conclusion, SoundHound AI's strong revenue growth, strategic positioning in a rapidly expanding AI market, and strategic acquisitions like Amelia make for a promising future. While achieving profitability in the near term presents a challenge, the company's long-term outlook remains promising.
Investors are closely watching SoundHound's future trajectory due to its impressive 250% stock increase over the past 12 months, driven in part by its success in the AI market. With large companies planning to invest between $175 billion to $250 billion in AI enterprise spending by 2027, SoundHound's conversion AI platform in finance, healthcare, and insurance markets, following its acquisition of Amelia, could yield significant growth opportunities.
Given SoundHound's sturdy stance in voice-enabled products and services and its ability to attract major brands like Chipotle Mexican Grill, Qualcomm, and Stellantis' automotive brands, investing in the company could be a viable option for those with a long-term perspective, despite its current unprofitability and high price-to-sales ratio.
