SoundHound AI’s stock has surged in 2024, supported by developments such as Nvidia’s $3.7 million investment, disclosed in a 13F filing on Feb. 14.
Despite pulling back from its 52-week highs, shares of SoundHound are still up over 80% year to date, outpacing the S&P 500 Index’s 4.5% returns.
When you compare that to the 3% return of the Nasdaq Composite, you might be wondering if SoundHound AI is on the road to be a million-dollar opportunity.
SoundHound stock and the surge
Established in 2005, Soundhound AI, based in Santa Clara, specializes in voice, sound, and language-recognition software, providing solutions for sectors such as restaurant drive-throughs and call centres.
SoundHound AI’s technology aligns with platforms like OpenAI’s ChatGPT, driving interest as businesses automate operations. Fourth-quarter results showed an 80% revenue increase, driven by partnerships with automakers, smart TV manufacturers, and restaurants like White Castle and Krispy Kreme.
With a market capitalization of about $1.2 billion, the company delivers exceptional conversational experiences through its innovative Houndify platform and suite of AI-powered tools.
SoundHound shares fell by almost 20% on March 1 as investors reacted to its Q4 2023 results. Its revenue increased by 80% year over year to $17.1 million, as cumulative subscriptions and bookings backlog doubled to $661 million from the year-ago quarter.
Still, SoundHound is yet to be profitable. It strives to trim its GAAP net losses, which decreased from $0.15 to $0.07 in Q4.
The company’s revenue is expected to grow by 51.5% year over year to $69.5 million in 2024. Additionally, they foresee a significant improvement in GAAP losses, with estimates narrowing to $0.30 per share in fiscal 2024 and further to $0.21 in fiscal 2025, down from $0.40 in 2023.
SoundHound potential
The market for voice-recognition technology could reach $50 billion by 2029, according to Statista. Considering this tech can be integrated into vehicles, smart-home appliances, and various business settings, it’s easy to see why so many of the world’s largest enterprises are pursuing the technology.
So, can investing in SoundHound make you a millionaire? Assuming its 2023 growth rate continues, projecting to 2030 suggests potential revenue of $680 million. However, with a competitive market and uncertain profitability, its stock’s future market cap could reach $6.1 billion, requiring over $180,000 in investment to reach $1 million.
Moreover, changes in financial reporting make predicting its growth challenging. SoundHound seems more of a momentum play with risks so that long-term investors might consider more established opportunities in the AI and voice-recognition market.
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