SoundHound AI: Emerging AI Stock with Potential for Parabolic Growth

Why SoundHound AI Stock Soared on Thursday

The company had no news to report today. It's earnings season, but SoundHound AI will publish its third-quarter results next Tuesday. The company didn't file any documents with the Securities and Exchange Commission (SEC) today, nor did it send out any press releases. It was a generally strong market day for several reasons, but SoundHound AI's stock shouldn't outperform the rest of the market for that reason. But there are other forces at work. The provider of artificial intelligence (AI) tools for audio interpretation and voice controls is acting like a meme stock today. The ticker was trending on the popular r/wallstreetbets stock-trading channel on Reddit (NYSE: RDDT) today as several influencers suggested heavy buying ahead of the upcoming-earnings report. Many posts also highlighted SoundHound AI's substantial short-sales interest at 24% of the total share count, setting it up for a sudden short-squeeze jump. This is a relatively small stock with a market cap of $2.5 billion today and $2 billion at Wednesday's market close. A dedicated group of social media users have the power to move the price of stocks with this profile -- small, lightly traded, and with large short-selling interests. About 69 million SoundHound AI shares changed hands today, more than triple the average trading volume over the last month. SoundHound AI's fundamentals are the real deal -- but you shouldn't buy it today I like SoundHound AI for its long-term business prospects, not for its potential to deliver quick profits with the help of social media campaigns. After building an unparalleled audio-interpretation platform for decades, the company has entered a new era of big-time business plans. The client list is long and growing, with many leading carmakers, restaurants, and consumer-electronics giants. The backlog of unfilled orders and subscription-style contracts stood at $723 million in the latest-earnings report and will probably be significantly larger in next week's report. So yeah, I agree with the meme stock crowd that SoundHound AI is a good investment, but I wouldn't buy it today. These skyrocketing price spikes usually fade out in a matter of days, often reversing into negative territory. And they do absolutely nothing to help the company run its business or find more customers. In other words, I would put SoundHound AI on the back burner while this online media frenzy lasts. The upcoming Q3 report will have my undivided attention, and I'm particularly interested in how the order backlog is growing. This is not the right time to buy SoundHound AI stock.

One Wall Street Analyst Thinks This Emerging Artificial Intelligence Stock Could Rise 60% in the Next Year

Looking at Wall Street analysts' price targets can be a worthy exercise, because it may identify some stocks with huge upsides you haven't considered. After finding such a stock (at least according to analysts), the best move is to do your own research and see if you can confirm their findings. One stock with massive upside is SoundHound AI (SOUN -0.97%), a small artificial intelligence (AI) company. Gil Luria from D.A. Davidson has a price target of $9.50 on SoundHound's stock. This was last updated on Sept. 30, so the analyst's target is based on the same information that all investors have access to now. That price target indicates around a 60% upside, which would be a fantastic one-year run for the stock. Is this a legitimate price tag? Or should investors steer clear? Let's find out. SoundHound's product has already been integrated in several industries SoundHound AI does what its name implies: It uses AI to help identify and process sounds. While recognizing audio and converting it into something that can be input into a computer is a very broad and useful technology, SoundHound is finding commercial success in two specific areas: restaurants and automaking. On the restaurant side, the company is helping streamline operations by using its AI model to take drive-thru and mobile orders. The performance of these models often exceeds that of the humans they supplement, allowing restaurants to become more efficient. On the automotive side, the company has been integrating its technology with various generative AI models to make driving assistants more useful. Its most notable client is Stellantis, and SoundHound's model has been integrated with various makes and models under the manufacturer's umbrella in Europe and Japan. Those are relatively niche uses for the technology but finding success in a few areas before expanding elsewhere is key when growing a company. The business case is there, but how about its financials? 2025 is slated to be a massive year for SoundHound SoundHound is still a relatively small company, so its revenue figures may not jump off the page at you. In the second quarter, it generated $13.5 million in revenue, up 54% year over year. However, it has a revenue backlog totaling $723 million. This shows the huge demand for its technology, but it takes a while to integrate and test out before SoundHound can recognize it as revenue from its partnerships. Management is bullish that it can start converting some of that backlog into revenue in 2025, so it expects revenue to exceed $150 million next year. That's rapid growth, but if it happens, the $9.50 price target doesn't seem so far-fetched. Right now, SoundHound stock looks expensive because it trades at 30 times sales. SOUN PS ratio; data by YCharts; PS = price to sales. But that's using trailing data. If we plug in management's 2025 revenue projection of $150 million, then its price-to-sales ratio (P/S) tumbles to 11 times forward sales. That would be a pretty cheap valuation, considering that the company would have essentially doubled its revenue at that time. So SoundHound's valuation could end up being higher than 11 times sales, which would cause the stock to rise. As a result, I don't think the $9.50 price target is out of line. If management can deliver on what it told investors during its second-quarter conference call, then SoundHound AI will easily be a market-crushing investment next year. Because of that, I think investors can buy the stock if they believe in what management is saying and the company's potential market opportunity.

2 Artificial Intelligence (AI) Stocks That Could Go Parabolic | The Motley Fool

SoundHound and Snowflake are cheap stocks in their respective industries. Artificial intelligence (AI) stocks are some areas in the market where investors are looking for stocks that could go parabolic -- a status given to a stock because its price chart looks like a parabola, quickly increasing on the price axis in a relatively short time. I've identified two companies that could achieve this status: SoundHound AI (SOUN -0.97%) and Snowflake (SNOW -1.51%). Each has a strong chance of going parabolic in the future. Both companies are heavily involved in the AI arms race. SoundHound has AI technology that helps process audio inputs and converts them into inputs that computers can utilize. Two areas where this is seeing strong adoption are the restaurant and automotive industries. In the restaurant sector, SoundHound's technology is replacing drive-thru attendants and delivered performance exceeding that of its human counterparts. On the automotive side, SoundHound's technology is being combined with generative AI models to create a more useful driving assistant. This technology has been implemented in multiple Stellantis vehicles and is in use in Europe and Japan, although a U.S. launch is likely coming soon. SoundHound is a relatively small company right now, as its Q2 revenue total was only $13.5 million (up 54% year over year). However, management expects its 2025 revenue to top more than $150 million as more bookings are converted into actual product launches. It's this kind of growth that could turn SoundHound AI into a parabolic stock. Snowflake is also involved in the AI revolution on the software side. Training these models requires an incredible amount of data, which is where Snowflake comes in. Snowflake's data cloud product gives companies the tools they need to capture data, store it efficiently, and feed it into applications. Snowflake also has the Snowflake Marketplace, where datasets can be purchased to train AI models. Snowflake's product squarely benefits from more companies using AI, which should be a catalyst for the business. In Snowflake's second quarter of 2025 (ended July 31), it grew product revenue by 30% year over year to $829 million. However, its remaining performance obligations rose 48% to $5.2 billion, which shows that its contracted usage is rising. Product revenue is expected to rise about 26% for the full year. With the stock trading for 12 times sales, it's starting to look like a great price for the software company. Snowflake is putting up strong results, but investors don't see the flashy AI levels of opportunity other businesses have. Just compare Snowflake to Palantir, which trades for 43 times sales and grew at a 27% pace in Q2 (yes, slower than Snowflake!). If Snowflake received that same level of hype, it could easily go parabolic. For Snowflake, if everything was going right for it, I wouldn't be talking about the chance of it going parabolic; it would already be happening. Snowflake needs to become more efficient and generate some profits. While Snowflake compares favorably to Palantir in some ways, it doesn't in others. Palantir is a fully profitable company that increases its profit margin each quarter, while Snowflake does not. Each was at a similar profitability level three years ago, so a turnaround is possible. If Snowflake can generate some profits, it will gain respect in the market and see its stock price rise accordingly. SoundHound has high expectations already baked into the stock, but investors are still waiting for a "wow" moment to really send the stock up. Over the next few quarters, SoundHound will have a chance to give investors what they're looking for, as it's poised to convert a massive amount of its $723 million backlog into realized revenue. Until then, SoundHound will be trading on the prospects of a strong future business. However, if SoundHound's use case expands (like how it's doing with its Amelia product in banking), then it is primed to go parabolic.