SoundHound AI: Surging Revenue and Market Potential Amidst Stock Volatility

Better Artificial Intelligence Stock: BigBear.ai vs. SoundHound AI

The emergence of artificial intelligence (AI) into the mainstream propelled the value of many AI-related stocks. Some may already be too expensive to buy now. But there are AI stocks out there that still may hold significant upside. Two of those are BigBear.ai (BBAI 1.15%) and SoundHound AI (SOUN -4.30%). BigBear.ai is an analytics firm using artificial intelligence to analyze an organization's data and help it make better decisions based on that data. SoundHound offers an AI-powered voice platform that can understand human speech in 25 languages. But just because these companies have AI in their names doesn't mean they're a buy. To decide which AI investment is superior, let's examine them individually. BigBear.ai's pros and cons BigBear.ai offers analytics technology used in various situations across a broad range of industries. For instance, the company secured a five-year, $165 million government contract in October to help the U.S. Army transition into a data-driven military. In another example, the Denver International Airport implemented BigBear.ai's biometric verification software this year to capture images of travelers and automatically verify their identities. Along with these customer wins, BigBear.ai acquired Pangiam in March. Pangiam develops facial recognition and biometrics technology and strengthens BigBear.ai's capabilities in this area, which the company calls "one of the fastest growing categories for the application of AI." The combination of customer wins and its Pangiam acquisition boosted revenue. In the third quarter, BigBear.ai grew sales 22% year over year to $41.5 million. Despite the revenue growth, BigBear.ai is not profitable. It suffered a net loss of $12.2 million in Q3. It also holds nearly $196 million in debt. A look at SoundHound AI SoundHound's technology, too, is relevant across a broad spectrum of industries. It can, for example, answer customer service phone calls and take food orders. Elsewhere, car manufacturers, such as Stellantis, have adopted SoundHound's AI voice system, to provide voice-activated features in cars. SoundHound, like BigBear.ai, made acquisitions to boost its business. Earlier this year, the company acquired AI firms SYNQ3 and Amelia, the former to expand its footprint in the restaurant industry, the latter to extend into new industries, including healthcare and retail. This led to 89% sales growth in Q3 to $25.1 million. The acquisitions allowed SoundHound to diversify its revenue substantially, putting it on better financial footing. In Q3 last year, 90% of its revenue came from the automotive sector with 72% coming from a single customer. If that customer had left, SoundHound's business could have collapsed. Now, that customer represents 12% of revenue. Also like BigBear.ai, SoundHound isn't profitable. Its Q3 net loss totaled $21.8 million. But its Q3 debt was less than $40 million. Earlier this year, it paid off a debt of $100 million. Choosing between BigBear.ai and SoundHound AI Although neither BigBear.ai nor SoundHound is profitable, up-and-coming tech companies are known for sacrificing profits to expand their businesses as fast as possible. So, a lack of profitability isn't a concern as long as these AI firms deliver outsized revenue growth. In BigBear.ai's case, its Q3 sales were strong, but year to date, its revenue is down from $114.6 million in 2023 to $114.4 million in 2024. Its struggle to increase revenue year over year, coupled with a significant debt burden, is not a good sign for a tech company operating in the hot AI sector. Meanwhile, SoundHound sales through three quarters were up 75% year over year to $50.2 million. BBAI Revenue (TTM) data by YCharts. Another factor to consider is each's 2024 financial outlook. In March, BigBear.ai originally forecasted at least $195 million in revenue for this year. When it announced Q3 results on Nov. 5, management reduced that estimate to $165 million. SoundHound updated its 2024 revenue outlook after releasing Q3 earnings on Nov. 12, but in the opposite direction. Before its acquisitions, the firm forecast a minimum of $63 million in 2024 sales, then upped that to $80 million after the acquisitions. It now expects to reach at least $82 million in 2024 revenue. With SoundHound's sales growing at a substantial clip, it's the better AI investment over BigBear.ai. That said, investing in either stock is not for the faint of heart. The share prices of both companies are highly volatile, as demonstrated by their high beta of about three. This means their stocks add volatility and risk to the typical stock portfolio. So although SoundHound is the better choice of these two AI companies, its business is still in the early stages, and since it went public in 2022, little historical performance exists to gauge whether it can succeed over the long haul. Therefore, SoundHound stock is only for investors with high risk tolerance.

This Magnificent Artificial Intelligence (AI) Stock Has Crushed Nvidia in the Past Year. Can It Continue to Skyrocket in 2025?

Nvidia has been in magnificent form on the stock market in the past year, recording stunning gains of almost 207% as of this writing. This is thanks to the consistently strong growth in the company's top and bottom lines on account of the booming demand for its artificial intelligence (AI) chips. However, there is another AI stock that has outshined Nvidia on the market during this period. SoundHound AI (SOUN -4.07%), a small company that provides voice AI solutions to enterprises, has witnessed a 256% jump in its stock price in the past year, and it is worth noting that Nvidia has played a key role in the stock's remarkable rally. Shares of SoundHound AI received a big shot in the arm earlier in 2024 when it emerged that Nvidia held a small stake in the company. Though SoundHound stock witnessed a lot of volatility following that revelation and saw a sharp decline, it has strung together impressive gains over the past six months. But the question is, will SoundHound AI be able to continue its red-hot rally in 2025? Let's take a look at the company's latest quarterly results and its valuation to see what the coming year might look like for this AI company. SoundHound is growing rapidly with no signs of slowing down SoundHound released third-quarter 2024 results on Nov. 12. The company's quarterly revenue jumped an impressive 89% year over year to $25.1 million, while non-GAAP (adjusted) net loss shrank to $0.04 per share from $0.06 per share in the same quarter last year. Consensus estimates compiled by FactSet were expecting SoundHound to post $23 million in revenue along with a loss of $0.07 per share. The company's guidance was the icing on the cake. Though SoundHound didn't issue quarterly guidance, it did increase its revenue estimate for the full year. The company now expects to finish 2024 with $83.5 million in revenue at the midpoint of its guidance range, up from its earlier expectation of at least $80 million. The updated revenue guidance would translate into an 82% increase in the company's top line. That would be a nice improvement over the 47% revenue growth SoundHound AI clocked in 2023, suggesting that the company's conversational AI solutions are gaining impressive traction in the market. Even better, it has released a revenue guidance range of $155 million to $175 million for 2025, suggesting that its revenue could grow at a faster pace next year and nearly double from 2024 levels. SoundHound had earlier guided for at least $150 million in revenue for 2024. However, it has started expanding into new verticals following the recently concluded acquisition of Amelia, a company that provides conversational AI solutions to the insurance, healthcare, and finance verticals. SoundHound AI has already built a solid customer base in the automotive and quick-service restaurant (QSR) verticals, counting even Stellantis as a customer, and the good part is that it continued landing new business last quarter. The company claims that it is providing its voice AI solutions to seven of the top 20 global QSR brands, has expanded into India to provide local language-based solutions for Kia cars, and has won a new electric vehicle (EV) client in the Middle East. All these developments explain why SoundHound AI is expecting its outstanding growth to continue next year, but is it a good idea to buy the stock right now following its stunning surge in 2024? What does the valuation say? SoundHound isn't profitable right now, so let's take a closer look at its price-to-sales ratio to examine its valuation. The stock is currently trading at 37 times sales, which is on the expensive side considering that Nvidia, which is a significantly larger company that dominates the AI chip market, is trading at an almost identical sales multiple and is on track to more than double its revenue this year. Meanwhile, SoundHound stock is way more expensive when compared to the S&P 500 index's price-to-sales multiple of 3.1. At the same time, investors who are looking to buy this growth stock right now should remember that it is prone to big swings, as pointed out earlier in the article, the latest example of which could be seen in the aftermath of its earnings report. SoundHound AI stock was down 13% on the day following its latest quarterly results. That may seem a tad surprising considering it delivered a beat-and-raise quarter. So, SoundHound stock's ability to sustain its stock market rally will depend on its ability to consistently deliver eye-popping growth and justify its expensive valuation. Analysts, however, aren't upbeat about the stock's prospects in the coming year. The seven analysts covering SoundHound have a 12-month median price target of $7 on the stock, which points toward a 7% jump from its current stock price (as of this writing). Therefore, investors looking for a mix of value and growth may be tempted to stay away from SoundHound considering its rich multiples. But at the same time, investors with a higher appetite for risk and looking for a red-hot AI stock may still consider buying SoundHound AI considering its terrific growth, as well as the fact that there are other, more expensive stocks that aren't growing as fast as this voice AI company but continue to benefit from the fast-growing adoption of their AI offerings.

SoundHound AI Stock Sinks 17% Despite Beating Earnings and Revenue Estimates and Raising 2024 and 2025 Guidance | The Motley Fool

The company beat Wall Street's consensus estimates for revenue and earnings, and management increased its revenue outlook for both full-year 2024 and 2025. So, why did the stock decline? The stock sell-off is probably due to a couple of related factors. The first one is that investors likely had very high -- indeed, too high -- expectations going into the release because the stock had run up considerably since Monday, Nov. 4. Through Tuesday, it gained a whopping 49% over this week-plus period, compared with the S&P 500's 4.8% rise. The second reason likely has to do with management not issuing some type of profitability guidance for 2025. Sure, it increased its revenue outlook for next year, which is a positive. But it's not all that challenging for companies to grow revenue while losses are expanding -- and, indeed, SoundHound's year-over-year operating loss and net loss did widen in the third quarter. (Its losses per share narrowed, but that's only because the number of shares increased by 49% from the year-ago period.) As background, SoundHound AI shares surged (as you'll see in the below stock chart) following AI chip leader Nvidia's disclosure in February, via a Securities & Exchange Commission (SEC) filing, that it owns a small stake in the company. Nvidia owns about 1.73 million shares, which gives it an ownership stake of less than 1%. Nvidia's tiny ownership stake is not a good reason to buy shares of SoundHound. Data source: SoundHound AI. GAAP = generally accepted accounting principles. The year-over-year revenue growth has been helped by acquisitions over the last year, though we do not know to what degree. The company's latest acquisition was Amelia in the third quarter, as we'll explore in a moment. Wall Street was looking for a GAAP loss of $0.07 per share on revenue of $23 million, so SoundHound exceeded both expectations. For the first nine months of 2024, SoundHound used cash of $75.8 million running its operations, an increase from the $54.4 million it used in the year-ago period. It ended the period with cash and cash equivalents of $136 million and long-term debt of $39.7 million. In the third quarter (August), SoundHound acquired Amelia, which it said "significantly expend[ed] its scale and reach in conversational AI across new verticals and hundreds of enterprise brands." More specifically, at the time of the acquisition, Amelia had customer service contracts with multinational companies in the finance, insurance, retail, and healthcare industries. SoundHound paid $80 million to purchase Amelia in a combination of cash and shares. In 2025, SoundHound expects that Amelia will contribute over $45 million to its revenue. It also expects the deal to be accretive to its earnings in the second half of 2025. Here's what CEO and co-founder Keyvan Mohajer had to say in the earnings release: This is SoundHound's largest quarter on record as the company takes its first steps into important new verticals. Our increased scale, combined with incredible market enthusiasm for conversational AI, is allowing us to execute on the company's vision. We believe that voice is the "killer app" for applied generative AI. Thanks to our best-in-class technology, mastery of complex vertical integrations, and proprietary AI software, SoundHound is ideally positioned to capitalize on this huge and growing opportunity. The company did not issue any earnings or profitability-related guidance for either year. SoundHound AI stock is worth watching because the company operates in an artificial intelligence space that has very strong growth potential. However, investors need to closely monitor the company's progress toward profitability, which did not move in the right direction this quarter on a year-over-year basis. Similarly, investors should keep a close eye on SoundHound's liquidity situation. At its current cash-burn rate ($75.8 million over the first nine months of 2024), the company's cash and cash equivalents ($136 million) would last just over five quarters, or just over one year and one quarter. Granted, the company could issue and sell additional shares, but that's not a solution without a downside for existing investors. Raising money in this way dilutes the ownership stakes of existing shareholders.

SoundHound Shares Sink Despite Surging Revenue. Is It Time to Buy the Stock on a Dip? | The Motley Fool

With the company reporting strong revenue growth, let's take a closer look at the company's most-recent results to see if this is a good opportunity to buy the stock on this dip. Despite the drop in its stock price, SoundHound's Q3 results were actually quite strong. The company's revenue surged 89% year over year to $25.1 million. Adjusted earnings per share (EPS) came in at a loss of $0.04, which was a nice improvement from the $0.06 loss it reported a year ago. Those numbers topped the analyst consensus calling for revenue of $23 million and a loss of $0.07, as compiled by Factset. It said that its cumulative subscriptions and bookings backlog, excluding its acquisition of Amelia, was double the year-ago period. It said that this number would be more than $1 billion, including Amelia, with an average duration of its contracts of around six years. Within the automobile space, the company said it saw double-digit automotive unit growth in the quarter, as well as double-digit unit price expansion. It noted last year that it had a large point-in-time deal with a large customer but that it has more software-as-a-service (SaaS)-like revenue now, given its scale and greater diversification. It also said it won a deal with a new up-and-coming Middle Eastern electric vehicle manufacturer. Within the restaurant vertical, SoundHound says it now has seven of the top 20 quick-service operators as customers. It continues to expand its drive-thru, phone orders, and employee assistance services. It also noted that it recently signed another large top-three global pizza chain. With its recent acquisition of Amelia, the company also made inroads into a number of other verticals. During the quarter, it won or renewed deals in the telecom, healthcare, insurance, retail, and banking spaces. It also renewed deals with a branch of the U.S. military and a top multinational payment card services company. SoundHound increased its full-year revenue outlooks for both 2024 and 2025. For 2024, it now expects revenue to come in between $82 million and $85 million, which is up from a prior outlook calling for revenue to exceed $80 million. Analysts were looking for revenue of $82.6 million. For 2025, the company raised its guidance from an expectation of revenue to be more than $150 million to a range of $155 million to $170 million. The analyst consensus was for 2025 revenue of $152.1 million. By all accounts, SoundHound turned in a very good quarter and issued strong guidance. Given the stock's rise this year, however, investors perhaps wanted an even bigger guidance increase. Yet the company sounded conservative in its forecast. It is still integrating the Amelia business, and it may look to jettison some lower-margin parts of its business. Amelia, though, is key for the company as it helps close some technology gaps and allows it to expand into more verticals. Both the auto and restaurant industries remain ripe with growth opportunities, but SoundHound's ultimate goal appears to become an AI voice ecosystem across industries that can help organizations handle very industry specific, sophisticated interactions. The company is rolling out its new Polaris foundation model, which it says it built on billions of real conversations, but I would imagine that adding Amelia information to future generations will help its AI models even more. From a valuation perspective, SoundHound trades at a price-to-sales (P/S) multiple of 15 times 2025 analyst estimates, which isn't particularly cheap. This company is still very much in its infancy with a huge opportunity in front of it. If the company can become the AI voice leader across industries, then the sky is the limit. And while its valuation isn't cheap, it also isn't outrageous given its growth. Given where the company is in its lifecycle, I view it as a solid but speculative growth stock. As such, I think investors can take a small position in the stock on this pullback.

SoundHound AI: Buy, Sell, or Hold? | The Motley Fool

As of this writing, it's been about three stock-trading days since I saw SoundHound AI (SOUN -17.06%) soaring like a meme stock, and warned that the sudden price jump wouldn't last. "This is not the right time to buy SoundHound AI stock," I said. Nearly a full market week later, the stock has gained another 8%. Was I wrong about the speculative nature of this artificial intelligence (AI) expert's stock jump? SoundHound AI's stock is still soaring because the meme stock action hasn't stopped. At least two metrics point in that direction: That's the bad news -- SoundHound AI's stock is rising for all the wrong reasons. This price jump is all about social media attention in an impressive market-moving scheme based on a large number of small trades. On that basis, I would still recommend leaving that "buy" button alone. I don't mind paying a premium for a soaring stock, as long as the high price is based on a solid business. Pure speculation gains are better left untouched, because they are sure to fade out as soon as the online posts die down. And now it's time for some good news. It's OK to buy SoundHound AI right now, with or without a 32% price gain in less than a week. You see, the meme lords actually picked a strong long-term growth idea this time. SoundHound AI addresses a very large and mostly unexplored market. It relies on decades of unique AI development to interpret voice commands with extraordinary accuracy. This ability is crucial for drive-through ordering systems, in-car infotainment controls, voice-driven phone menus, and much more. Monetizing this opportunity should deliver great investor returns in the long run, even if you may have overpaid a bit for your SoundHound AI shares. That's not empty talk, either. This company can back up its impressive ambitions with real business results. For example, SoundHound AI just reported third-quarter earnings. Revenues jumped 89% year over year to $25.1 million. Adjusted net losses shrank fro $0.06 to $0.04 per share. Encouraged by a wider market reach and many new household-name customers, management boosted their full-year revenue guidance by 4% and the next-year revenue outlook by 10%. And the full-year sales are expected to double in 2025. So yeah, this little company is going places and it's not too late to jump aboard the SoundHound AI bandwagon. You might be a happier investor if you picked up a few shares at a lower price, but your portfolio should do just fine even if you started your SoundHound AI position at a temporarily inflated stock price. You can always be prepared to grab a few more shares if and when the meme-stock boost fades out. And if you haven't taken any action on this stock yet, I'd recommend a few days of patient waiting on the sidelines. Taking your first steps into SoundHound AI ownership should be more comfortable at a somewhat lower buy-in price, and that's probably coming up fairly soon. Those massive torrents of social media posts usually don't last very long, and neither do their market effects. In other words, SoundHound AI looks like a great stock to hold in the long run, but you should probably pounce on a lower stock price in the near future.

SoundHound AI Stock Tumbles as Margins Drop

The Nvidia (NVDA)-backed company's third-quarter GAAP gross margin sank 24.3 percentage points to 48.6%, and non-GAAP gross margin tumbled 14.0 percentage points to 59.7%. That offset an otherwise powerful financial report, with its loss per share of $0.06 beating the $0.10 loss per share expected by analysts surveyed by Visible Alpha. Revenue soared 89% year-over-year to a record $25.1 million, also above forecasts. Co-founder and CEO Keyvan Mohajer said voice is the "killer app" for applied generative AI. He added that because of the company's "best-in-class technology, mastery of complex vertical integrations, and proprietary AI software, SoundHound is ideally positioned to capitalize on this huge and growing opportunity." The company now sees full-year revenue to be in a range of $82 million to $85 million compared with its earlier outlook of more than $80 million. It predicts fiscal 2025 revenue between $155 million and $175 million versus its previous estimate of more than $150 million. Even with today's declines, shares of SoundHound AI have tripled so far in 2024.

SoundHound AI plunges despite reporting record quarterly revenue

SoundHound AI (NASDAQ:SOUN) plunged approximately 15% during early market action on Wednesday despite posting record third quarter 2024 financial results and increasing its full-year revenue outlook. SoundHound AI offers conversational artificial intelligence agents for various enterprises. Its third-quarter 2024 revenue of $25.1M represented a

SoundHound AI Q3 Earnings: Revenue Beat, EPS Beat, 'Largest Quarter' On Record, 'Incredible' Market Enthusiasm For Conversational AI - SoundHound AI (NASDAQ:SOUN)

SoundHound reports an adjusted loss of 6 cents per share, beating analyst estimates for a loss of 7 cents per share. SoundHound AI Inc SOUN reported third-quarter financial results after the market close on Tuesday. Here's a look at the key metrics from the quarter. Q3 Earnings: SoundHound reported third-quarter revenue of $25.1 million, beating the consensus estimate of $23.02 million. The company reported an adjusted loss of six cents per share, beating analyst estimates for a loss of seven cents per share, according to Benzinga Pro. Total revenue was up 89% on a year-over-year basis. SoundHound said it significantly improved customer concentration in the quarter with only 12% of revenue attributed to its largest customer, down from 72% in the prior year. The company reported an adjusted EBITDA loss of $15.9 million. SoundHound ended the quarter with total cash and cash equivalents of $136 million. "This is SoundHound's largest quarter on record as the company takes its first steps into important new verticals. Our increased scale, combined with incredible market enthusiasm for conversational AI, is allowing us to execute on the company's vision," said Keyvan Mohajer, co-founder and CEO of SoundHound AI. Check This Out: Trump-Led Market Honeymoon Faces Crucial Test With Wednesday's Inflation Data Outlook: SoundHound raised its full-year revenue outlook for 2024 and 2025. The company expects full-year 2024 revenue to be in the range of $82 million to $85 million. SoundHound sees full-year 2025 revenue in the range of $155 million to $175 million. "We believe that voice is the 'killer app' for applied generative AI. Thanks to our best-in-class technology, mastery of complex vertical integrations, and proprietary AI software, SoundHound is ideally positioned to capitalize on this huge and growing opportunity," Mohajer said. SoundHound executives will hold a conference call with analysts and investors to further discuss the quarter at 5 p.m. ET. SOUN Price Action: SoundHound AI shares were down 2.51% in after-hours, trading at $7.37 at the time of publication Tuesday, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs

Why SoundHound AI Stock Plummeted After Reporting Its Largest Quarter Ever

Jose Najarro has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.