This Hot AI Stock is Set to Harness Huge Opportunity as ‘Demand Mojo’ Plays Out

SoundHound AI: An Underappreciated Pure-Play AI Company

In the increasingly competitive realm of artificial intelligence (AI), SoundHound AI Inc. is quickly emerging as an underrated player, according to analysts at Wedbush. Notably, the firm’s stock has seen astounding growth this year, and the company is poised to capitalize on what analysts consider a massive wave of AI spending in the coming years. In a recently released note, Wedbush analyst Dan Ives raised the price target on SoundHound’s stock (ticker: SOUN) from $10 to $22, attributing this optimistic outlook to the company’s strong “demand mojo” and solid AI-driven momentum heading into 2025.

The Future of SoundHound AI

Ives believes that SoundHound is currently undervalued as a pure-play AI company that is making significant advancements in its sector. The firm specializes in voice technology software powered by AI, and it is witnessing a robust uptick in the adoption of its enterprise AI software platform. According to Ives, their expanding Total Addressable Market (TAM) offers a promising growth trajectory beginning in 2025. “In our opinion, SoundHound represents an underappreciated pure-play AI company that is taking significant strides in expanding its share across the landscape,” he mentioned.

Impressive Stock Performance in 2023

Despite a modest fall of 1.2% in morning trading, SoundHound shares have experienced a staggering 688.4% increase in value this year, elevating the company’s market capitalization to $6.18 billion. For reference, Nvidia Corp (NVDA), another AI powerhouse, has seen a gain of 165.6% with a market cap of $3.22 trillion.

Since SoundHound went public in April 2022, it has yet to report a quarterly profit. However, Wedbush’s Ives emphasizes that the company is just entering the early growth stages of capitalizing on its increasing enterprise AI demand. He asserts that the AI spending wave represents a potential $1 trillion opportunity for the industry in the years to come.

Strategic Growth Initiatives

Ives also highlights that SoundHound’s comprehensive tech stack allows for various use cases for chat AI integrations across three key pillars: automotive, restaurants, and e-commerce. This innovative approach is not only generating traction for its recurring revenue software model but will also boost the company’s position in voice and conversational AI. Through strategic expansions into new verticals, SoundHound aims to improve its monetization capabilities.

Record Revenue and Partnerships

In November, SoundHound reported a record third-quarter revenue of $25.1 million and increased its revenue forecast for the fiscal year, crediting its efforts to broaden its target markets. Despite these successes, it is essential to note that SoundHound’s revenue remains a fraction of Nvidia’s reported $35.08 billion for the same quarter. As it stands, Nvidia not only remains an investor in SoundHound but also maintains a partnership, having owned 1.73 million SoundHound shares (approximately 0.5% of the total outstanding shares) by the end of the third quarter.

Innovations on the Horizon

At the upcoming Consumer Electronics Show in Las Vegas, SoundHound is expected to showcase its collaboration with Nvidia aimed at integrating large language model (LLM) capabilities into Nvidia’s Drive AGX platform. This edge device solution promises to enhance the in-car experience, allowing automakers to leverage cloud-based intelligence directly in vehicles.

Currently, SoundHound’s new Polaris LLM is in production. According to Ives, Polaris is designed to learn faster by processing data quickly, incorporating multilingual tools essential for nurturing stronger relationships with enterprises.

Analysts Weigh In

Among seven analysts surveyed by FactSet, five hold an overweight or buy rating on SoundHound, while two maintain hold ratings. With continued growth in its AI initiatives, strong financial performance, and strategic partnerships, SoundHound AI seems poised for a remarkable journey as it rides the AI wave into an exciting future.

In summary, as AI technologies continue to evolve and shape industries, companies like SoundHound AI are increasingly positioned to harness opportunities that could redefine market landscapes.