SoundHound AI, the once hot stock during Nvidia’s backing but later slumping after the chipmaker exited, is regaining momentum.
In the two trading sessions, SoundHound AI (SOUN) stock gained more than 43% after a record earnings release. The stock surged 17.3% on Aug. 11, following another 26.4% gain on Aug. 8.
Still, the stock remains 34% below its December peak and is down roughly 20% so far this year.
In early 2024, Nvidia (NVDA) disclosed an investment of $3.7 million in SoundHound. But in February, the AI-chip giant disclosed that it had sold all its shares, causing SoundHound to slump 28% on Feb. 14.
Now, Wall Street is taking another look at the stock’s potential, even without Nvidia’s backing.
SoundHound posted record earnings
SoundHound AI develops voice technology that helps businesses build their own assistants. Its system combines voice recognition with conversational AI to achieve interactions between humans and AI models.
Voice assistants like Siri, Alexa, and Google Assistant have been part of daily life for over a decade, answering questions, setting reminders, and controlling smart devices.
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But they’ve always come with a trade-off for companies that wanted to use them, as they had to stay within big tech’s walls, forcing companies to give up control over branding and user data.
That’s the opening SoundHound seized.
Founded in Santa Clara, California, SoundHound now builds white-label voice AI that lets businesses create their own custom assistants. Clients include Mercedes-Benz, IHG Hotels, and Spotify.
The voice AI market is booming, projected to grow nearly 30% annually from 2024 to 2030, according to Grand View Research. SoundHound’s latest earnings show it’s growing even faster.
The company’s revenue for the second quarter rose 217% year over year to $43 million, reaching an all-time high and above expectations of $33 million. This was driven by new wins and product cross-selling across customers.
“We are moving with speed to capture the explosion we’re seeing in the voice and conversational AI industry,” CFO Nitesh Sharan said in a statement.
Still, SoundHound is not yet profitable. Its second-quarter adjusted loss per share was 3 cents, better than the expected loss per share of 5 cents.
SoundHound has raised its full-year outlook to $160 million to $178 million, with the midpoint above the $164 million consensus estimate from FactSet.
Analysts raise SoundHound AI’s stock price target
Several analysts have lifted their stock price targets for SoundHound after the earnings.
Wedbush analyst Daniel Ives has raised the firm’s price target to $16 from $15 while maintaining an outperform rating, calling it an “under-appreciated pure-play AI company.”
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“The company continues to see increased momentum across all verticals despite increasing competition and a murky macro,” Ives wrote, citing “strong demand heading into FY25.”
Ladenburg has upgraded SoundHound to buy from neutral with a price target of $16, up from $9, thefly reported.
The firm said sales growth supports the company’s higher spending and noted strong near-term momentum. It sees voice as a key early use of AI and says SoundHound is adding significant utility for enterprises adopting AI functionality.
James DePorre, founder of Shark Investing and CEO of Hammerhead Strategies, has offered a technical take on SoundHound’s stock:
“Technically, the stock broke out of a low-level base and formed a ‘pocket pivot’ pattern. Volume was extremely high and should attract increased interest,” DePorre wrote on TheStreet Pro.
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“There is a large short position also, which may help to fuel additional upside,” he added.
Still, after a 43% surge, DePorre is reluctant to chase the recent high, though he said he will “aggressively trade the stock as it develops.”
SoundHound AI stock closed at $15.9 on Aug. 11.
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