SoundHound stock is booming thanks to Nvidia and institutional interest
AI speech recognition has emerged as one of the hottest industries of 2024, propelling companies like SoundHound AI (SOUN) to triple-digit gains.
The Santa Clara, California-based company has demonstrated that AI is not just a buzzword but an incredibly lucrative industry as more companies look to incorporate voice AI solutions.
Investors are betting big on SoundHound AI's potential, pushing the stock up 330% this year. But can the company deliver on the expectations fueling this rally?
SoundHound stock overview
Before the start of 2024, SoundHound was a relatively unknown company with a market cap of around $500 million. Fast forward to today, SOUN stock commands a market cap of more than $2.8 billion.
The stock has gained a whopping 339% in 2024, far exceeding the Nasdaq’s 28% year-to-date return. As of market close on Nov. 29, SOUN was within 10% of its record high set in March.
Although SoundHound AI may reflect a broader “mania” phase on all things AI on Wall Street, analysts at Wedbush and Cantor Fitzgerald maintain a pragmatically bullish outlook for the company.
In their view, SOUN stock is poised to outperform in the medium term as the company’s earnings and revenue continue to improve and attract more institutional investors.
In its most recent filing, Victory Capital Management, a $174 billion asset manager, disclosed that it had increased its holding of SOUN stock by 84,301 shares in the third quarter, bringing its total holdings to 120,812 shares.
Earlier this year, Nvidia disclosed a strategic partnership with SoundHound AI, including a stake of 1.7 million shares. While details of the collaboration remain sparse, reports suggest the companies are working together on voice assistants for car manufacturers.
What’s driving SOUN stock?
SoundHound AI is growing on the back of healthy demand for the company’s voice AI solutions.
Company-wide revenue increased by 88.7% in the third quarter, reaching $25.1 million. Although SoundHound reported a per-share earnings loss of $0.06, it was lower than expected.
Management expects full-year revenue to range between $82 million and $85 million. If it delivers the midpoint of that range, SoundHound’s revenues would be up 82% compared to 2023.
It would also mark a huge increase from the 47% revenue growth it delivered between 2022 and 2023.
SoundHound’s voice AI solutions are used by enterprise customers in the automotive, restaurant, finance, customer service, and smart device industries.
Its most prominent customers include auto manufacturers Hyundai, Kia, and Genesis, television brands like Vizio, as well as smartphone makers Qualcomm and Motorola.
SoundHound also has a partnership with Stellantis to integrate its AI voice technology into its European and Japanese vehicles.
In its most recent quarterly earnings report, SoundHound reported a more diversified customer base, expanding its AI agent customer service offerings to hundreds of additional companies.
The company currently has more than 250 technology patents and supports voice AI in more than two dozen languages.