SoundHound AI: Riding the Wave of Voice AI Innovation Amid Market Volatility

Stock-Split Watch: Is SoundHound Next? | The Motley Fool

Last year was a big one for stock splits. Major companies from Walmart to Chipotle Mexican Grill launched such operations, and players in the market's hottest growth industry -- artificial intelligence (AI) -- got in on the movement too. Leading chipmaker Nvidia, networking giant Broadcom, and equipment maker Super Micro Computer each announced and completed stock splits last year after their prices soared. And after each new stock split, investors' biggest question was: "Which market giant will be next to join this list?" Though these operations don't change anything fundamental about a stock or the company, they could be seen as a generally positive sign. (I'll talk more about that later.) For now, let's get to that investor question and consider if one of today's most explosive growth stories could be the next candidate for a stock split. I'm talking about SoundHound AI (SOUN -1.14%), a company that's reported double-digit revenue growth quarter after quarter and has seen its stock soar more than 800% over the past year. Let's take a closer look. You may not have heard of SoundHound before, but you might have interacted with its products without even realizing it. The company is a voice AI specialist, serving customers in industries such as automotive, restaurants, and healthcare. SoundHound's voice products stand out from the crowd thanks to its technology that results in higher quality communication; it translates speech directly into meaning, passing by the common step of translating the speech into text. The company has launched products in the areas of "smart ordering," vehicle intelligence, and employee assistance, just to name a few. All of this has resulted in significant growth quarter after quarter. In the most recent period, SoundHound reported an 89% increase in revenue to $25 million and made progress expanding its business across industries. Five different industries each contributed 5% to 25% to revenue. Just a year earlier, 90% of revenue came from the automotive sector. SoundHound is in high growth mode, expanding its platforms and its reach across industries, and investing in its technology. So, it's not surprising the company isn't yet profitable, reporting a net loss on a generally accepted accunting principles (GAAP) basis of about $21 million in the quarter. Now, let's consider the possibility of a stock split. Companies often split their stocks after a period of huge gains, and we can clearly say that SoundHound has seen its stock take off. The company has proven itself to be a popular choice among investors seeking future AI winners. A stock split, by offering more shares to current holders, brings down the price of each individual share, something that may be necessary if gains have led a stock to reach very high levels. For example, the level of about $1,000 a share may be a psychological barrier for some investors -- they might hesitate to buy a stock for this price even if the valuation looks OK. Stock splits don't change anything fundamental about the company or the stock, so market value, the value of your holding if you already own the shares, and the stock's valuation remain the same. That's why a stock split on its own isn't a reason to buy or sell a stock. But a stock split could be viewed as generally positive as it can make a stock more accessible to a broader range of investors, and a company's move to split its stock could suggest management is optimistic about the future and the potential for the stock to keep on climbing. As mentioned, SoundHound's stock has soared, but the price hasn't reached a level that makes it difficult to access. Today, it trades for about $15 a share. And a stock split won't lower the valuation, so it wouldn't actually make SoundHound cheaper for investors. SoundHound hasn't split its stock in the past, meaning we don't have clues about whether the company is amenable to such operations or not. But I would say that right now, a stock split isn't really necessary for SoundHound. So I wouldn't expect this AI player to be the next company to launch a split even after the stock's enormous gains in recent times.

Where Will SoundHound AI Stock Be in 5 Years? | The Motley Fool

SoundHound AI (SOUN -0.19%) has delivered stunning gains of 732% in the past year, as of this writing. However, if we take a look at the stock's performance since it went public in April 2022 by merging with a special purpose acquisition company (SPAC), the picture is quite different. Though SoundHound has registered healthy gains of 89% in just under three years since its stock market debut, it has been prone to wild swings. This is evident from the chart below. SoundHound stock took off big time in February last year once it emerged that semiconductor giant Nvidia has a small stake in the company. Though a Nvidia filing with the Securities and Exchange Commission (SEC) revealed an investment of just $3.7 million in shares of this voice artificial intelligence (AI) solutions provider, investors saw this as a vote of confidence in SoundHound's prospects. The good part is that SoundHound has been delivering outstanding growth quarter after quarter, and expects its growth to accelerate. Moreover, the company operates in a market that's currently in its early phases of growth and has the potential to become much bigger over the next five years. Does this mean investors looking to buy and hold an AI stock for the next five years can still consider buying SoundHound? A look at the chart below tells us that SoundHound's revenue growth trajectory has been improving since going public. Its 2022 revenue was up by 47% from the previous year, followed by a similar increase in 2023. SoundHound is yet to release its full-year 2024 results. (Results for the third quarter of 2024 were released in early November; its investor relations page has no information on timing of the next quarterly report.) However, its full-year revenue guidance in November of around $83.5 million points toward an 82% improvement from the previous year. Even more encouraging, the company expects to nearly double its top line in 2025 to $165 million at the midpoint of guidance. Such an outstanding revenue growth trajectory can be attributed to fast-growing demand for SoundHound's voice AI solutions in industries such as automotive and restaurants. More importantly, the company has taken steps to ensure that it diversifies into more industries. SoundHound spent $80 million to acquire enterprise AI voice solutions provider Amelia last year. The company points out that this will help it access new verticals such as finance, insurance, and healthcare. With a combined base of around 200 customers, SoundHound believes that its Amelia acquisition will open up cross-selling and upselling opportunities. This acquisition could turn out to be a smart move in the long run, as the conversational AI market is expected to grow fivefold over the next several years, according to Fortune Business Insights. The market research firm expects this niche to generate annual revenue of $61 billion in 2032. SoundHound AI, therefore, has a lot of room for growth for the next five to seven years, which could allow it to keep growing at impressive rates. SoundHound's client list is solid enough to help it sustain impressive growth levels for the next five years. From Stellantis to Hyundai to Qualcomm to Oracle to Chipotle, SoundHound's client list is big and diversified. The company points out that no customer will account for more than 10% of its top line following the acquisition of Amelia. What's more, the company has diversified its business model to ensure robust long-term growth. It collects royalties and subscription fees. The company's impressive customer list and its revenue generation models explain why SoundHound was sitting on a cumulative subscriptions and bookings backlog of more than $1 billion at the end of the third quarter of 2024. This figure more than doubled year over year, and that's a good thing, as it points toward a healthy revenue pipeline for the future. SoundHound's bookings backlog refers to committed customer contracts that it has yet to fulfill. The subscriptions backlog is on the ambiguous side as the company says it is the "potential revenue achievable for the company with current customers where the company is the leading or exclusive provider." The subscriptions backlog is calculated for a five-year period, with SoundHound estimating that customers will ramp up the deployment over a four-year period before fully rolling out its solutions in the fifth year. Of course, the subscriptions backlog metric can be impacted by cancellations or if SoundHound is unable to convert its potential customers into actual customers. The company says it makes reasonable assumptions and applies a lower adoption percentage to pilot and proof-of-concept customers. Even with these caveats, the massive backlog SoundHound is suggesting for the next five years indicates that its outstanding growth trajectory is set to continue. However, there is one problem for investors looking to buy the stock right now. SoundHound's phenomenal surge in the past year has made the stock very, very expensive. It has a price-to-sales ratio of 64. Though the sales multiple has fallen substantially following the stock's recent pullback, it is way higher than where it was a year ago. So, value investors looking to add an AI stock to their portfolios would want to look elsewhere, as even though SoundHound seems poised for robust growth for the next five years, it is too expensive to buy right now. However, growth-oriented investors with the ability to take on more risk can consider keeping SoundHound on their radars. The company's growth rate is picking up, and it has a huge addressable market to tap into. In fact, there are stocks such as Palantir trading at a whopping 80 times sales and growing at a slower pace than SoundHound. Moreover, SoundHound's forward sales multiples are significantly lower than the trailing one, and that's not surprising, considering the healthy top-line growth that it is expected to deliver. SoundHound AI is not an investment for the fainthearted. The stock has been prone to big swings and is very expensive right now. But at the same time, it seems to have the ability to justify its valuation by sustaining its remarkable growth over the long run, and that could result in more stock price upside. We don't know where the stock will be in five years, but it's got a lot going for it.

This Magnificent Artificial Intelligence (AI) Stock Has Shot Up Over 175% in Just 3 Months, and It Could Soar Higher in 2025 | The Motley Fool

SoundHound AI has soared over 175% in the past three months, and could jump even higher in 2025. Shares of conversational intelligence solutions player SoundHound AI (SOUN 10.32%) have soared more than 175% in the past three months (at the time of this writing). While the recent tech sell-off has affected the company's share prices significantly, it is nevertheless an exciting artificial intelligence (AI)-powered opportunity. The company's AI-powered voice systems are simplifying interactions between businesses and customers by using speech recognition technologies to understand and respond to natural human speech with minimal errors. These systems are being increasingly adopted in industries such as restaurants, automotive, healthcare, insurance, and banking to improve productivity while reducing costs. Let's assess whether the stock can demonstrate robust growth momentum in 2025. SoundHound AI has established itself as a major voice AI solutions player in the restaurant industry. The company has deployed its voice-enabled solutions in drive-thru, phone ordering, or other applications at more than 10,000 restaurants across three continents. The company has also partnered with seven of the top 20 quick-service restaurant (QSR) brands. Currently, major food chains such as Panda Express, Church's Texas Chicken, and White Castle Plus are using the company's solutions to improve processing and ordering speed, and for increased upselling and cross-selling opportunities. The automotive sector presents another compelling growth opportunity for SoundHound AI. The company's technology is being increasingly deployed to power in-car voice assistants, especially by multiple electric vehicle (EV) manufacturers. The company has already signed deals with four EV manufacturers, with two already using it in real time on the road. SoundHound AI's partnership with Stellantis has also played a pivotal role in increasing the company's penetration in the automotive sector, with its generative AI-enhanced digital assistant, SoundHound Chat AI, being implemented in seven of the latter's brands. SoundHound AI has also partnered with DayinTec, a leading Tier 1 automotive software supplier in China, to rapidly expand its presence in international markets. Besides restaurant and automotive sectors, SoundHound AI's customer service portfolio is also seeing strong momentum in other sectors, such as healthcare and financial services. The wide customer base has helped to dramatically reduce SoundHound AI's customer concentration risk. The company's largest customer contributed only 12% to its overall revenues in the third quarter, far lower than 72% a year ago. SoundHound AI has reported impressive financials in the recent quarter (Q3 of fiscal 2024). Revenues were up by 89% year over year to more than $25 million. The company is not yet profitable. However, this is nothing unusual, since many technology companies prioritize growth over profitability in the early stages of development. SoundHound AI expects to reach revenues of $155 million to $175 million and EBITDA profitability by 2025. The company also boasts a strong balance sheet, with $136 million cash and $39 million in debt at the end of Q3. All this highlights the company's robust growth potential amid a clear path to profitability. SoundHound AI's shares have seen a dramatic fall in the past few days, amid industrywide panic triggered by Chinese start-up DeepSeek releasing its open-source AI model, DeepSeek R1. The model is comparable to OpenAI's GPT-o in reasoning and math while costing 95% less. This has raised alarms about the strikingly high valuations of U.S.-based AI companies. However, several prominent Wall Street analysts, such as Wedbush's Dan Ives and Laffer's Nancy Tengler, consider this tech sell-off to be a smart buying opportunity for retail investors. While cost efficiency is a key factor for large language models, accuracy is equally important. Although DeepSeek R1 has demonstrated impressive training efficiency, it continues to hallucinate and give inaccurate outcomes. SoundHound AI's proprietary Polaris foundation model has been trained on billions of real conversations and over a million audio hours across dozens of languages over two decades. With a large amount of training data and a longer time frame, Polaris has managed to demonstrate superior accuracy, reduced human effort, and lower hosting costs compared to peers. The model also supports almost one-third of the company's AI interactions with restaurant customers. SoundHound is gearing up to use this model to power all its customer experiences in the coming months. Subsequently, as the company's voice offerings are increasingly adopted across industries, the stock may rise again in 2025. SoundHound AI is currently trading at 75.4 times trailing 12-month sales, far higher than its three-year average price-to-sales ratio of 34.6. The valuation is undeniably expensive at first glance, especially since it is trading at higher multiples even compared to AI stalwarts such as Nvidia, Microsoft, and Meta Platforms. Yet, it has been seen time and again that expensive high-growth stocks can remain highly priced for long periods -- as long as they have a competitive advantage and continue to grow at a rapid pace. Hence, considering SoundHound AI's diversified customer base, proprietary technology platform, and robust financials, the company seems like a smart pick in 2025.

Where Will SoundHound AI Stock Be in 3 Years? | The Motley Fool

It's 2025, and the generative artificial intelligence (AI) hype cycle is getting a little long in the tooth. Over the next three years, the companies that dominate this opportunity must turn industry excitement into concrete results. Let's dig deeper to see if SoundHound AI's (SOUN 10.32%) innovative take on audio and speech recognition could help it beat the market. 2025 may prove to be a year of reckoning for the AI industry. Since the launch of OpenAI's ChatGPT in late 2022, the majority of investor returns have come from the infrastructure side of the opportunity -- where companies like Nvidia make the graphics processing units (GPUs) and other types of hardware needed to run and train AI models. However, new low-cost models like DeepSeek's could undermine the profitability of AI infrastructure-based business models while (possibly) bringing down operating costs for consumer-facing software providers like SoundHound. This story has yet to play out. However, over the coming years, investors should expect software as a service (SaaS) to be an increasingly important driver of AI industry growth and profits. SoundHound has a clear opportunity to help bring generative AI into the mainstream. The company has been working on speech and audio recognition technology since its founding in 2005 -- putting it in a prime position to turn large language models (LLMs) into truly conversational experiences. The goal is to allow humans to interact with machines with the same ease and convenience as talking to another human. Over the long term, the synergy between these technologies could pave the way for lifelike and intelligent robots. However, SoundHound focuses on more accessible use cases, like cars and restaurants. The company has already secured a bevy of high-profile clients. These include the restaurant chain White Castle (which pledged to implement its voice recognition in 100 drive-thru kiosks in 2024) and electric vehicle start-up Lucid Group, which uses SoundHound's software to power its voice control feature. According to Lucid's CEO, the automotive assistant will help with questions about vehicle functionality and real-time queries about sports, weather, or the stock market. At least some of SoundHound's automotive assistant tech is powered by third-party LLM technology developed by OpenAI's ChatGPT. While this could imply that SoundHound has a shallow economic moat because it hasn't built an industry-leading LLM of its own, this setup allows it to focus on what it does best (sound and voice recognition) while benefiting from the innovation and competition between the different LLM developers. Unsurprisingly, SoundHound is posting impressive growth as more clients implement its voice AI solutions. Third-quarter revenue jumped 89% year over year to $25.1 million. The company has also dramatically diversified its customer base, with only 12% of this quarter's sales coming from its largest client compared to 72% in the prior-year period. Investors should expect growth to accelerate even further over the coming years because of SoundHound's relatively small size and recent acquisitions, like the $80 million buyout of Amelia AI, which builds corporate AI agents for internal use. Amelia adds corporate clients like healthcare giant Teva Pharmaceuticals and IT company Fujitsu and is expected to generate a whopping $150 million in 2025. But while SoundHound's growth prospects look excellent, it is still far from profitability. Third-quarter operating losses ballooned 132% to $33.8 million. And like with many speculative growth-focused businesses, this problem could worsen before it gets better. With a price-to-sales ratio of 65 (compared to the S&P 500 average of 2.8), SoundHound's valuation doesn't seem to account for these potential challenges. Shares may underperform over the next three years as AI hype dies down.

Why SoundHound AI Stock Lost 29% in January

SoundHound AI (SOUN 1.75%) has been one of the most volatile stocks of the artificial intelligence (AI) era, and that pattern continued in January. In a rough month for AI stocks, SoundHound, which provides AI voice technology for carmakers, restaurant chains, and others, finished on the losing side, but it wasn't Chinese AI start-up DeepSeek that spoiled the month. The stock's slide came predominantly during the week of CES, which took place Jan. 7 through 11, as some of its competitors made some important strides, and investors seemed unimpressed with SoundHound's presentation. By the end of the month, the stock had fallen 29%, according to data from S&P Global Market Intelligence. As you can see from the chart, most of those losses came in the second week of the year. SoundHound fell during CES, formerly known as the Consumer Electronics Show, as it disappointed investors with its own presentation, while rival Cerence AI impressed the market. Cerence announced a new automotive collaboration with Nvidia, which is also an investor in SoundHound. SoundHound unveiled new technology that essentially enables customers to have a dialogue through their car to allow them to find and order take-out food.The stock fell 10% on Jan. 7, the day that news was announced, and continued to slide from there, a sign Wall Street had higher hopes for the presentation. However, SoundHound bounced back on Jan. 21 when the stock jumped 21% after it signed up Rekor, a roadway intelligence technology company, to partner with SoundHound to help emergency personnel like police, fire, and rescue use voice commands for systems like license plate recognition. SoundHound couldn't hold those gains, however, and slumped over the rest of the month. What's next for SoundHound? SoundHound has gotten a lot of attention from investors for its exposure to AI, but after surging last year, the stock seems to have gotten ahead of itself. SoundHound isn't profitable, and it trades at a price-to-sales ratio of 72. The company is still small, with this year's revenue expected to be less than $100 million. The AI stock is growing quickly, but it has a lot to prove as a business. If it emerges as the leader in voice AI, it could be huge, but it seems likely to run into competition from big tech companies if it continues to grow.

1 Unstoppable AI Stock That's Not Affected By DeepSeek's Breakthrough. | The Motley Fool

Many investors are worried about DeepSeek's latest breakthrough. Its Chinese developers claim to have trained a generative AI model that's on a par with many of the U.S. versions for under $6 million. This has caused many AI-related stocks to sell off, although some have remained strong. One stock that's still well off its all-time highs (although for reasons unassociated with DeepSeek) is SoundHound AI (SOUN -0.19%). It's down over 40% from its highest point, which could lead investors to believe that this unstoppable AI stock is a great buy right now. However, investors must understand a few key points before taking a position in SoundHound AI. Nearly all of these generative AI models use text as an input into the system. This is useful when the user has access to a keyboard, but it can be useless in other scenarios. That's where SoundHound's software comes in. It allows users to input audio into an AI model. It's unaffected by DeepSeek's innovation because it isn't tied to a single generative AI model; it can be used with any of them. Audio input isn't a new concept (think Alexa or Siri), but the technology hasn't been the most consistent performer. SoundHound's product is significantly better than its predecessors' results and has found strong uses in many settings, including restaurants, automobiles, healthcare, finance, and insurance. This broad range of industries is fairly new to the company. Just last year, 90% of revenue came from automaking, and 72% came from a single customer. Now, those revenue streams are more diversified, and no industry makes up more than 25%, and no client makes up more than 12%. That's a huge step to take for a maturing company and eliminates a single point of failure risk. The company's growth has also been impressive, with third-quarter revenue rising 89% year over year. The fourth quarter is expected to be even better, with the average Wall Street analyst projecting 97% revenue growth. This is also expected to be an amazing year for the company, as analysts project 96% growth. Clearly, SoundHound is experiencing rapid growth, and many investors are excited about that. However, Wall Street is also well aware of its growth prospects and bid up the stock as a result. SoundHound isn't profitable, so using earnings-based metrics to value the business isn't a good strategy. However, when a company is nearly doubling its revenue for consecutive years, it gets a pass for not being profitable. As a result, I'll value the company based on its revenue. Normally, software companies trade for 10 to 20 times sales, with the more expensive stocks trading for upward of 30 times sales. SoundHound far exceeds those levels -- the stock is priced at 65 times sales. That's well above the typical valuation levels I established, but most software companies aren't doubling their revenue year over year. Furthermore, 2025 may not be the only year the company doubles its revenue. Its revenue backlog, the amount of business it has already signed that it needs to realize sales on, reached over $1 billion. This isn't guaranteed growth, but it does give investors insight into what it's future may look like. Management says this figure is stretched out over six years, but there are likely more contracts to be signed that affect the later dates of that span, so dividing this figure by six isn't a great way of assessing it, either. Regardless, this shows that the company will have strong growth past 2025, making it an even more difficult stock to assess. It may be an expensive stock, but it also has incredible growth. I won't be taking a position in it at these levels, but I wouldn't blame investors if they did. There's a ton of potential in SoundHound's stock, even if it has a high starting point. However, the stock could easily crumble if a big AI company created a competing product. As a result, investors need to understand the large risk associated with the stock and size their position appropriately.

Why SoundHound AI Is Skyrocketing Today | The Motley Fool

Shares of SoundHound AI (SOUN 10.32%) were flying higher on Tuesday. The stock had gained 11.3% as of 2:40 p.m. ET, but had been up as much as 12.5% earlier in the day. The leg up comes as the S&P 500 gained 0.7% and the Nasdaq Composite gained 1.3%. SoundHound, which develops voice-based artificial intelligence (AI) technology, saw its shares recover after yesterday's tariff activity seemed mostly resolved. Stocks across the market including SoundHound were hit Monday as investors believed the U.S. might be at the beginning of a trade war. Although President Donald Trump's tariffs on China remain in place, those meant for Canada and Mexico were paused on Monday. SoundHound stock started recovering after news broke that deals had been reached with Mexico and Canada. The recovery continued today after China announced a response to Trump's tariffs on goods imported from that country. Reading between the lines, it appears that China would like to avoid escalating things further and has provided a way for the countries to settle things. The tariffs China introduced in response are specific and would have a limited impact. Further indicating the country would like to reach a deal, the tariffs will not take effect immediately. SoundHound does business with China and a trade war would directly impact its bottom line. At least for now, it seems this may be avoided. SoundHound is still in the red, reporting a net loss last quarter of more than $21 million on revenue of only $25 million. Despite this, the company has a market capitalization exceeding $5.6 billion. This company is all about the future; it has yet to prove it can justify a market cap that high. As such, only very risk-tolerant investors should consider it.

Prediction: This Artificial Intelligence (AI) Stock Could Leave Palantir in the Dust in 2025 | The Motley Fool

Here's why I think SoundHound shares can leave Palantir in the dust in 2025. SoundHound AI makes software that uses audio inputs to interact with users. Most of the biggest breakthroughs in AI over the past few years have come from generative AI models that utilize text input. However, this input method is only so useful -- there are numerous situations where talking to the AI model produces a better user experience. This isn't a new concept, as AI assistants (like Siri and Alexa) have been around for some time, but they often misinterpret what the user says. SoundHound's software is far more advanced, and has produced positive results in the applications where it has been deployed. One area where SoundHound's platforms are being used is in restaurant order-taking, both over the phone and at drive-thrus. For example, White Castle deployed SoundHound to automate order-taking at dozens of its drive-thrus and found that the platform outperforms human-based benchmarks on order speed and accuracy. SoundHound's software found other use cases in the automotive industry (proving the interface for digital assistants in cars), as well as in the financial, insurance, and healthcare industries. This has led to massive growth for the company. In Q3, its revenue rose 89% year over year. This success is expected to continue, as its projected revenue will be around $165 million for 2025, almost doubling the $83.5 million it expects to report for 2024. SoundHound also has a large backlog of contracts with clients, but for which the revenue has yet to be recognized. Now, this isn't guaranteed revenue, but the backlog metric can provide investors an idea of what they can expect from the company in the future. SoundHound AI's now exceeds $1 billion over the next six years. There's also a bit of a curve there, as management likely has great visibility into 2025 through 2027 revenue, but the next three years after that could still be taking shape. SoundHound will still need to achieve massive growth to justify its current share price, but its backlog indicates that some of that growth is already contracted. The market has not overlooked SoundHound's success. It has bid the stock up tremendously over the past few months due to anticipated sales growth in 2025 and beyond. SoundHound isn't profitable yet, so interested investors need to use revenue-based metrics to assess its valuation. It's trading for 64 times sales, a figure that far exceeds the range of 10 to 20 times sales that most software companies trade within. However, most software companies don't double their revenue year over year, so SoundHound is an unusual case. Based on the midpoint of SoundHound's 2025 revenue guidance, it trades at 33 times forward sales. That's still expensive, but considering the growth it already has contracted for 2026 and beyond, it appears a lot more justifiable than Palantir's valuation. Palantir is a much larger company, and it's also turning a profit. However, it's only growing its revenue by around 30% annually, and recently traded for 74 times sales. That's even more expensive than SoundHound's already lofty price tag, though it's growing much slower. This disconnect can't last forever. It won't be surprising if SoundHound's stock leaves Palantir's in the dust from here based on its currently "cheaper" price tag and far superior growth.