SoundHound AI Positioned for Explosive Growth: Why Investors Should Take Note
Analyst Prediction: A Bright Future for SoundHound AI Stock
D.A. Davidson analyst Gil Luria recently set a $9.50 price target for SoundHound, reflecting a significant gain of approximately 60% over its current price. Luria’s forecast, updated as recently as September 30, is based on available market data and the company’s accelerating growth in the AI sector.
SoundHound AI’s Expanding Industry Presence
SoundHound’s cutting-edge AI technology helps systems recognize and process sounds, catering to audio-based demands across sectors. SoundHound is already making significant strides in the restaurant and automotive industries, which have each embraced its technology to streamline operations and elevate user experiences.
In the restaurant sector, SoundHound’s AI models improve efficiency by handling drive-thru and mobile ordering processes. These systems often outperform human counterparts, optimizing order accuracy and reducing wait times.
The automotive industry has also adopted SoundHound’s technology, particularly through partnerships with brands under the Stellantis umbrella across Europe and Japan. By integrating its AI models with various systems, SoundHound is enhancing the functionality of in-car driving assistants, providing a safer and more interactive driving experience.
Although these are relatively niche applications, they serve as an important foundation for the company’s future growth. SoundHound’s successful entry into these sectors provides a strong base before potentially expanding into other markets.
Revenue Growth: Why 2025 Could Be SoundHound’s Breakout Year
As a relatively young company, SoundHound is just beginning to scale revenue. In Q2 2023, the company reported $13.5 million in revenue, marking a 54% year-over-year increase. While its current revenue might seem modest, SoundHound’s $723 million revenue backlog demonstrates strong demand for its technology.
Management anticipates significant revenue growth beginning in 2025, driven by the conversion of this backlog into recognized revenue. SoundHound’s projections for 2025 exceed $150 million, a potential revenue leap that would bring the analyst’s $9.50 price target within reach.
SoundHound’s Valuation: High Today, But Lower Forward Multiples
Currently, SoundHound’s stock trades at a high 30 times its trailing sales, according to YCharts data. However, if SoundHound meets its 2025 revenue target of $150 million, this price-to-sales (P/S) ratio would drop to 11, aligning with its robust growth outlook and making the stock appear much more reasonably priced.
Is SoundHound AI a Buy?
SoundHound’s ambitious 2025 revenue targets and solid footing in the restaurant and automotive industries suggest a promising future. The $9.50 price target might just be the start of SoundHound’s growth story, especially if it continues to secure key partnerships and deliver strong performance in its existing segments.
For investors looking for an AI stock with high growth potential and exposure to multiple high-demand sectors, SoundHound AI presents an enticing opportunity. As the company scales its backlog into substantial revenue, it’s primed to be one of 2025’s standout tech investments.
