Home » Could SoundHound AI be the next tech stock to make millionaires?

Could SoundHound AI be the next tech stock to make millionaires?

by Simon Jones Tech Reporter
23rd Apr 24 11:14 am

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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