Key Takeaways
- High surge in stock price in 2024, but has seen a slight market correction.
- Generally known for its audio pattern recognition in understanding the origins of songs.
- Revenue growth has increased, but SoundHound remains to be an unprofitable company.
- Analysts such as Jim Cramer believe the stock is experiencing a short squeeze.
Introduction
You are likely aware of Soundhound AI (SOUN) and have seen its incredible stock surge throughout 2024. You may be wondering whether it is a good time to buy Soundhound AI stock, and add it to your investment portfolio in 2025.
With good fundamentals such as revenue growth and a handful of buy signals coming from analysts, investing in SOUN stock might be a good idea. Of course, there are multiple risks you must always consider, and below we will dive into the reasons for and against this stock.
What is SoundHound AI?
Soundhound AI is a leading artificial intelligence company that specializes in voice recognition technology. They offer advanced speech and sound recognition software. Founded in 2005, its main product revolves around SoundHound Speech Recognition and Natural Language Processing (NLP) technologies.
Key features:
Houndify: A customizable voice, powered by AI, designed for developers and businesses to deploy across their products and solutions.
SoundHound Music: Likely one of the company's more famous products, this detects sounds such as music and identifies its original source.
Conversational AI: An AI you can interact with, generally designed to have continuous conversations regarding any topic or subject.
SoundHound AI's Stock Performance
Recent Performance
Soundhound AI has experienced an incredibly high volume of volatility, with a recent drop of 3.50% and a larger pullback of almost 20% following an 836% surge in price in 2024.
The company's technical indicators are showing a weakened bullish moment as the stock's price is hovering below a Simple Moving Average SMA_5 but still slightly above the SMA_20 and SMA_200. This indicates potentially short-term bearish performance but with promising long-term potential.
That all said, Soundhound AI has seen impressive revenue growth in the third quarter of 2024 of roughly a 89% YoY compared to the previous year. Following this revenue growth, the company still remains unprofitable, with a net margin of -86.6%.
News Sentiment on SoundHound AI
Jim Cramer has suggested the stock is facing a short squeeze which is driving the stock's price levels. However, overall news sentiment around this stock remains relatively calm, and this could be an indicator of high risks, or large potential opportunities ahead.
What Market Analysts Are Saying About SoundHound AI
| Analyst | Rating | Action | Price Target | Date |
HC Wainwright & Co. Scott Buck | Strong Buy | Maintains | $8 - $26 | 2024-12-23 |
Wedbush Daniel Ives | Buy | Maintains | $10 - $22 | 2024-12-16 |
Barclays Glenn Mattson | Strong Buy | Downgrades | $7 | 2024-11-13 |
DA Davidson Gil Luria | Strong Buy | Maintains | $9.5 | 2024-09-30 |
Future Prospects and Considerations
Potential for Future Partnerships
Partnerships such as the integration of ChatGPT with Stellantis, could be a strong indicator that SoundHound can find similar strategic deals; this could boost the overall revenue of the company and potentially drive up its profit margins.
Investment Risks
However, like all stocks, there are substantial risks involved. You must ensure that you have a strong understanding of the stock's general fundamentals, as it has been made clear that the current stock price compared to its profit margin is substantially unbalanced, which could lead to further future pullbacks.
Portfolio Strategy
If you're considering adding SoundHound AI to your investment portfolio, then it is recommended that you proceed with caution and perhaps allocate a small amount of your funds to this stock. Treat it more as a 'wait-and-see' type of stock, as the market sentiment could push its value higher throughout 2025.
Conclusion
As you can see, SoundHound is on a promotional path, with a lot of community and sentiment support. One of their biggest hurdles is overcoming their fundamentals. The company will need to dedicate its time to figuring out how to drive up its profit margins to support any future stock growth.
Frequently Asked Questions
Should I buy SoundHound AI?
We cannot directly say yes or no; however, financial analysts have shown promising indicators by announcing strong buys.
Can SoundHound AI reach $100?
It is not entirely out of the question, as the company's market cap is roughly $7 billion, and for the stock price to be $100 This will drive its market cap to over $32.9 billion, which is an achievable goal.
Is SoundHound AI undervalued?
At its current level with its current fundamentals, I would say it is not undervalued; if anything, it is currently overvalued due to its failure to generate profit.
