SoundHound AI (SOUN -4.69%) stock saw a pullback in Thursday’s trading. The company’s share price fell 4.7% in the session and had been down as much as 8.1% earlier in trading.
While there doesn’t appear to have been any major business-specific news behind the pullback, investors may have moved to take profits after a pop for the company’s share price earlier in the week. Despite today’s pullback, the stock is still up roughly 9% over the last week of trading. Even more striking, the company’s share price is up roughly 39% over the last three months.
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Is SoundHound AI stock a good buy right now?
SoundHound AI has been highly volatile over the last year of trading. While the company’s share price is still up roughly 197% across the stretch, it’s also still down approximatley 49% from its peak in the period.
Even as the company’s sales base has ramped up rapidly, sales growth has continued to accelerate. Revenue increased 151% year over year in the first quarter of the company’s current fiscal year, which ended March 31. The company still only posted $29.1 million in sales in the period, but sales growth in the quarter marked a dramatic improvement over the 73% annual growth it posted in the prior-year period.
SoundHound is an early mover in the voice-based agentic artificial intelligence (AI) space, and it has huge expansion potential over the long term — but its valuation profile still comes with a risk. The company now has a market capitalization of roughly $4.9 billion and is valued at approximately 31 times this year’s expected sales.
For investors with a very high risk tolerance, SoundHound AI could still be a worthwhile investment. The company has been posting very impressive sales momentum, but its valuation already prices in a lot of strong growth in the future. If you’re looking to build a position in SoundHound AI stock, using a dollar-cost-averaging strategy for your purchases may be better than buying in all at once at today’s prices.
Keith Noonan 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.
