SoundHound AI: The Rising Star in AI-Powered Audio Recognition

Could SoundHound AI Be the Next Palantir? | The Motley Fool

Palantir Technologies (PLTR 0.47%) has been one of the most exciting stocks of 2024, rising around 275% year-to-date at the time of this writing. Those are impressive returns that every investor wants, which causes many to hunt for stocks that could be the next Palantir (at least in terms of stock performance). With how exciting the artificial intelligence (AI) investing space is right now, it's an excellent hunting ground for finding stocks with massive upside. Many have identified SoundHound AI (SOUN 3.55%) as one AI stock with that kind of potential. So, could SoundHound AI be the next Palantir? SoundHound AI isn't trying to hide what it does with its name. It has an AI-powered audio recognition platform that helps convert speech input to a format that AI can use as an input. This technology has ramifications everywhere and has already found many use cases. SoundHound AI's technology has already brought AI to drive-thru windows, digital assistants in cars, and banking. This wide use case is only just the beginning for SoundHound AI. As you can imagine, there are countless places where having accurate speech input into an AI model would be useful. This has translated into a booming business for SoundHound AI, even if it is just at the beginning stages of really seeing its business explode. In Q3, SoundHound AI generated $25 million in revenue, up 89% year over year. For reference, Palantir generated $725 million in revenue, so SoundHound AI is much smaller. One of the biggest investment cases for SoundHound AI is its massive revenue backlog. This figure comes from the potential revenue that can be recognized if the contracts they've signed pan out, which isn't a perfect metric, but it gives investors an idea of how the business could progress. As of Q3, management stated that it's "well north of $1 billion" over a period of about six years. This underlies the massive growth potential in SoundHound AI's stock, and it looks poised to convert some of that backlog to real revenue in 2025. Management guided that revenue will be between $155 and $175 million in 2025. Considering that SoundHound AI's 2024 projected revenue is $84 million, its revenue will double next year. That's explosive growth, and considering SoundHound AI's backlog performance, it likely can continue even after 2025. Furthermore, the breadth of its revenue stream is expanding. During last year's quarter, 90% of revenue came from the automotive sector. Now, no sector accounts for more than 25% of total revenue. On a customer level, 72% of revenue came from a single client last year. This year, the largest customer accounts for only 12% of sales. While SoundHound AI isn't a "risk-free" stock by any means, that level of diversification on a sector and client level represents the relative risk of the stock coming down. On the growth side, SoundHound AI is shaping up to be a stock that may not just be the next Palantir, but one that could outperform it. But it isn't without its risks. SoundHound AI isn't a fly by-night stock that nobody has heard of. It's well known and has garnered a premium valuation as a result. SoundHound AI trades for a very expensive 38 times sales. Now, that's cheaper than Palantir's 58 times sales, but both of these figures look quite unreasonable. Make no mistake; these are two incredibly expensive stocks. However, only SoundHound AI has the growth rate to grow into this valuation; Palantir doesn't (at least right now). If SoundHound AI can keep up its trajectory of doubling its revenue each year for a couple of years (and it has enough order backlog to reach that target), then the expensive price you pay right now might be worth it a few years down the road. As a result, I think SoundHound AI could be a better investment than Palantir if you are patient with the stock. This is a high-risk small-cap stock, so there will be a lot of volatility. Additionally, I'd suggest keeping the position size small, as SoundHound AI could implode as fast as it rose due to a new competitor or a failed product launch. SoundHound AI could be an incredible AI investment for 2025, but it does involve a lot of risk, so investors must be mindful of that.

Prediction: SoundHound AI Stock Will Soar in 2025 | The Motley Fool

One artificial intelligence (AI) stock that has received a lot of buzz is SoundHound AI (SOUN 18.20%). While the reasons for the hype are numerous, they don't overshadow the fact that SoundHound AI is growing rapidly with a bullish outlook in 2025. As a result, the stock could continue to record serious gains, and investors may want to keep this stock on their radar heading into 2025. SoundHound AI does pretty much what its name suggests: It incorporates AI with audio recognition. Integrating AI models with voice prompts has long been done; just take a look at the various car, home, or phone assistants. However, the recognition of voice inputs has always been OK at best, and the response quality also varied. The company's platform delivers strong advancements in this technology, and it has already seen widespread adoption in some fields. One area it has seen success in is restaurant order automation. Whether it's over the phone or in a drive-thru, SoundHound has a product that can outperform humans in terms of speed and accuracy. Another area SoundHound has seen growth is the automobile market. Specifically, through its partnership with Stellantis, SoundHound has rolled out generative AI-powered chatbots that are far more capable than the run-of-the-mill vehicle assistants most vehicles were previously equipped with. This technology hasn't made it to the U.S. yet, but it has been integrated into newer Stellantis vehicles in Europe and Japan. There are countless more uses for SoundHound's technology, and the opportunities form the foundation of an attractive investment. In the third quarter, SoundHound's revenue rose an impressive 89% year over year to $25.1 million. A year ago, 90% of revenue came from the automotive industry, but in the latest quarter, the largest sector was only 25% as restaurants, financial services, insurance, and healthcare have all increased their share. SoundHound isn't profitable as it's still in the early stages of growth. Still, investors should know its operating loss was $33.8 million for the quarter, meaning expenses more than doubled what the company generated in revenue. That said, unless SoundHound's growth falls off substantially, this loss is not yet a major concern. Fortunately, management is guiding for full-year 2024 revenue of $82 million to $85 million, up more than 75% from the previous year. And in 2025, management expects revenue to land between $155 million and $175 million, thanks in part to its acquisition of Amelia, an enterprise voice AI company. As a cherry on top, management expects to deliver positive earnings before interest, taxes, depreciation and amortization (EBITDA) by the end of 2025. I have little doubt the stock will soar if management can deliver on that bullish guidance. Because SoundHound AI is unprofitable, a popular valuation metric to consider is the price-to-sales (P/S) ratio. The stock trades at a pricey 29 times sales. However, that valuation is not completely out of the ordinary, especially for the market's top AI stocks. Palantir, one of the S&P 500's best performers in 2024, trades at more than 55 times sales while growing revenue at a less impressive pace than SoundHound AI. That said, Palantir is also a much larger and more profitable business. In the end, investors should be aware of the risk that comes with SoundHound's premium valuation. Shareholders' expectations are sky high. Meanwhile, many of its business relationships are rather new and still susceptible to disruption. As a result, investors need to ensure their position sizing is representative of the risk associated with a volatile growth stock. If SoundHound can meet its financial targets, continue to grow its customer base, and further expand into new industries, it has the potential to extend its winning streak. In fact, I wouldn't be surprised if SoundHound AI proves to be one of 2025's best-performing stocks.

SoundHound AI Stock Analysis: Can Revenue Growth Outpace Cost Increases?

Parkev Tatevosian, CFA 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. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Great News for SoundHound AI Stock Investors!

Parkev Tatevosian, CFA 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. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

SoundHound AI Stock Investors Should Know This

Parkev Tatevosian, CFA 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. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Is This a Sign That SoundHound AI Is Becoming a Safer Stock to Buy? | The Motley Fool

SoundHound AI (SOUN 6.17%) emerged as a top artificial intelligence (AI) stock to own this year after investors learned that Nvidia had invested in the business. It was a great vote of confidence in the up-and-coming voice AI business that the prestigious company invested in its operations. Many retail investors saw this as a sign that SoundHound may be the real deal and the next big AI stock to own. But when SoundHound reported its earnings numbers, it didn't exactly prove that it was the next Nvidia, and some of that excitement has cooled off. The company was growing at a fast rate, but its operations have been unprofitable, and it's been dependent on a particular sector of the economy (automotive) for growth. In the company's most recent earnings report, its revenue numbers looked better and the business appeared more diverse. Does this mean that SoundHound is less risky to invest in? Could this be an ideal time to buy shares of this AI stock? A big concern for investors is when a business is highly reliant on a single customer. Not only does it mean the company will become dependent on how well that other business is performing, but it can also imply that the products and services it's offering aren't as useful to other customers or adaptable to other types of businesses. That can create significant question marks, especially for a company like SoundHound, which is in the early stages of growth. In SoundHound's third-quarter results, which went up to the end of September, the company again generated fantastic revenue growth, with sales rising by 89% year over year to $25.1 million. But according to the company's earnings report, the increase in revenue was primarily due to SoundHound's recent acquisitions of AI companies Amelia and SYNQ3. SoundHound says that its largest customer now accounts for 12% of revenue, compared with 72% in the same period last year. A year ago, 90% of its revenue came from the automotive sector, and now, the company's customer mix is much more varied with automotive, financial services, restaurants, healthcare, and insurance sectors each accounting for 5% to 25% of its top line. Here, too, investors should be careful not to read too much into these results, given the big impact from acquisitions. When SoundHound announced its acquisition of Amelia, a key benefit was that the business contained a diverse customer base that included "hundreds of large enterprise brands." By adding the business to its operations, SoundHound has technically diversified its customer base. However, it's difficult to tell how much of that diversification, if any, came as a result of the company's organic growth. One area where there's still a glaring issue for SoundHound is on the bottom line. The company's operating loss for the quarter more than doubled to $33.8 million. While the company's revenue has risen at a fast rate, the problem is that operating expenses are increasing more quickly (likely due to acquisitions), as they more than doubled from the same period a year ago. SoundHound is diversifying and growing its business at a fast rate but still isn't showing that it's doing so in a sustainable way where it's on a path to profitability. The company also reported $136.4 million in cash and cash equivalents as of the end of the period, which isn't a whole lot when you consider it burned through $75.8 million during the past nine months. There are positives to take away from SoundHound's latest earnings numbers, but this is still a risky business to invest in. The company is growing but spending heavily to do so. Until that changes, I'd hold off on buying the stock. The danger for investors is that with the company's continual cash burn and lack of profitability, frequent share offerings may remain the norm for the business for the foreseeable future. This would result in not only dilution, but also put downward pressure on the stock, which could limit its upside and potentially lead to losses for investors who buy it today.

Why Is Everyone Talking About SoundHound AI Stock?

Parkev Tatevosian, CFA 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. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Why SoundHound AI Stock Was Racing Higher on Thursday

Impressive news from a high-profile business partner was a major reason for the stock price pop experienced by SoundHound AI (SOUN 8.38%) on Thursday. The artificial intelligence (AI) company was up by nearly 9% in late-session trading, a rate that was easily topping the 0.8% rise of the S&P 500 (^GSPC 0.53%). That news was the quarterly results posted after market hours Wednesday by leading graphics card processor company Nvidia, whose cutting-edge hardware products are widely used in the burgeoning AI industry. Happily for that industry -- not to mention its shareholders -- Nvidia did very well in the third quarter of its fiscal 2025. It managed to nearly double its already considerable revenue on a year-over-year basis, to more than $35 billion, and somehow top that with a 103% improvement in per-share net income (which hit $0.81). Both figures were comfortably above the consensus analyst estimates. This positively affects SoundHound AI in two important ways. One, it clearly illustrates that there's more than enough demand for AI functionalities of all kinds to sustain companies supplying the hardware that makes the tech possible. Second, and more directly, Nvidia is an investor in SoundHound AI; as of Sept. 30, the former company owned more than 1.7 million shares of the latter. Agents of change That happy development with Nvidia's results wasn't the only reason the market was sweet on SoundHound AI Thursday -- the company had some good news of its own to report. That morning, it said in a press release that its AI "agents" had assisted one of its clients, insurer Apivia Courtage, in helping more than 100,000 customer inquiries. SoundHound AI added that this had reduced by 20% the number of inbound requests handled by Apivia's customer relations specialists. Both of these developments were unambiguously positive for SoundHound AI, and should boost the company's profile. Just now, it isn't considered one of the more impactful or influential AI businesses on the market.

SoundHound AI Shares Are On The Rise Friday: What's Going On? - SoundHound AI (NASDAQ:SOUN)

The operational success boosted investor confidence, driving SoundHound AI's stock up by 16.3%. SoundHound AI, Inc. SOUN shares are trading higher on Friday. The company announced the deployment of its conversational AI agent, Amelia at Apivia Courtage, as part of the AEMA Group. Here's what you need to know. What To Know: In a press release on Thursday, SoundHound AI reported that Amelia AI agents managed over 100,000 customer calls in 2024, reducing the volume of inbound queries handled by human employees at Apivia Courtage by nearly 20%. These calls were largely focused on medical expense reimbursements and insurance policy information. The deployment, which began in Jan. 2023, was designed to improve efficiency and allow customer service teams to focus on higher-value tasks. The CEO of Apivia Courtage, Emmanuelle Nguyen, stated that integrating the AI system enhanced work quality for employees and improved workplace atmosphere. Michael Anderson, EVP of Enterprise at SoundHound AI, emphasized the benefits of automation in enabling contact center staff to manage more complex tasks. "With AI agents managing routine customer questions, Apivia Courtage's employees are now able to focus on more rewarding and valuable aspects of their work. We're thrilled to support them in delivering thousands of high-quality interactions," commented Anderson. Apivia Courtage, operating under the AEMA Group, is one of France's largest insurance entities, serving over 11 million customers through more than 1,600 agencies and 3,900 brokers. The group's annual revenue exceeds €15 billion. "Projects like this really show the incredible value AI and automation can deliver, not only to our customers but also to their customers," said Anderson. SOUN Price Action: SoundHound AI shares were up 20.6% at $8.41 at the time of writing, according to Benzinga Pro. Image Via Shutterstock. Market News and Data brought to you by Benzinga APIs