Where will SoundHound AI stock be in one year?

SoundHound AI (NASDAQ:SOUN) It has emerged as one of the hottest technology growth stocks on Wall Street. At the time of this writing, shares are up a staggering 870% year to date, fueled by growing market enthusiasm for the company’s innovative AI solutions that may be at the beginning of long-term, transformative growth.

Shareholders have a lot to celebrate as 2024 comes to a close, but can this historic rally continue? Let’s explore where SoundHound AI stock could be in one year.

Major breakthrough for artificial intelligence It lies in its ability to do so Understanding and generating natural language. Human speech is quickly becoming the preferred method For people and AI-powered devices to interact with many applications, intuitive voice communications provide great importance Advantages compared to the text experience.

SoundHound AI is an industry leader in conversational intelligence, powered by its own proprietary platform. Starting with early successful partnerships with major automakers that combine the company’s in-car intelligence with voice assistance and generative AI capabilities, the key development this year is the growing number of use cases. The company is bullish on AI-powered customer service solutions, where AI agents can answer complex user queries in a wide range of industry sectors with a conversational voice.

comments By CEO Kevan Mohajer highlighted how technology is advancing. Mehajer said, during a recent conference call with investors:

AI customer service will become as essential to all businesses as Wi-Fi and electricity. Thanks to the incredible strides voice AI has made in recent years, we believe users will prefer to have their questions and transactions handled by a consistent, accurate AI conversational agent rather than a human.

Ultimately, this opportunity helps explain the market’s enthusiasm for SoundHound AI stock.

In the third quarter (for the period ending September 30), SoundHound AI posted revenue of $25.1 million, an increase of 89% year over year. The company now serves more than 200 enterprise-level clients, showcasing its diverse business mix. For the full year, SoundHound AI expects revenue of about $84 million, representing an 83% jump from 2023.

The main revelation from the quarterly report came in the form of new guidance for 2025, with the company targeting revenues between $155 million and $175 million next year. These forecasts indicate an accelerated growth rate of 96% at the midpoint estimate compared to the 2024 estimate. Although profitability is not expected in the foreseeable future, management aims to achieve positive adjusted EBITDA (EBITDA) by the end of 2025.

The story continues

After the astonishing rise in SoundHound AI stock, investors must take issue with an objectively expensive valuation.

At its current market cap of $9 billion, SoundHound AI shares trade at an impressive 90 times this year’s revenue forecast as a price-to-sales (P/S) ratio. This level far exceeds other AI stocks such as Palantir Technologies At a forward P/S ratio of 66 or Nvidia At 26, which in contrast to SoundHound AI is profitable and generates positive free cash flow.

The market can often ignore these metrics and reward high-growth companies with a premium valuation. However, there is an argument that the market has gone too far with SoundHound AI, pricing too many positives into its outlook for many years to come. The danger is that the results are starting to disappoint. In the long term, it is unclear whether the company will be able to maintain its technological edge or how the conversational AI market will develop in a highly competitive environment.

SoundHound AI stands out as a unique AI software company and the latest results speak for themselves. However, I think that buying with conviction is too expensive at the current level. I expect shares to be lower by this time next year, with the silver lining being that a correction may provide an opportunity for patient investors to buy SoundHound AI at a lower, more attractive price.

Have you ever felt like you’ve missed out on your most successful stock buying journey? Then you’ll want to hear this.

On rare occasions, our team of expert analysts issues a “Double bottom” stock. Recommendation of companies they think are about to emerge. If you’re worried about missing your opportunity to actually invest, now is the best time to buy before it’s too late. The numbers speak for themselves:

• Nvidia: If you invested $1,000 when we doubled your money in 2009, You will have $362,166!*

• apple: If you invested $1,000 when we doubled your money in 2008, You will have $48,344!*

• Netflix: If you invested $1,000 when we doubled your money in 2004, You will have $491,537!*

We are currently issuing “double” alerts for three amazing companies, and there may not be another opportunity like this anytime soon.

See 3 “double down” stocks »

*Stock Advisor returns as of December 23, 2024

And Victor He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool recommends C3.ai. The Motley Fool has Disclosure policy.

Where will SoundHound AI stock be in one year? Originally published by The Motley Fool