SoundHound AI Faces Profitability Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 10h ago
0mins
Source: Fool
- Stock Volatility: SoundHound AI's shares have fallen 34% over the past year, reflecting market concerns about its profitability, particularly after Nvidia sold its stake, leading to diminished investor confidence.
- Revenue Growth: Despite a 68% year-over-year revenue increase to $42 million in Q3, the company's net losses soared 402% to $109.3 million, indicating potential long-term risks associated with its expansion strategy.
- Acquisition Strategy: SoundHound's recent $60 million acquisition of customer service AI startup Interactions may drive short-term growth, but such acquisitions could drain capital and exacerbate losses, increasing the risk of future failure.
- Market Outlook: The company's technology applications in the restaurant and automotive sectors show promise; however, ongoing substantial losses and reliance on acquisitions challenge investor confidence in its future profitability.
Analyst Views on SOUN
Wall Street analysts forecast SOUN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SOUN is 16.60 USD with a low forecast of 11.00 USD and a high forecast of 26.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
7 Analyst Rating
5 Buy
2 Hold
0 Sell
Moderate Buy
Current: 9.840
Low
11.00
Averages
16.60
High
26.00
Current: 9.840
Low
11.00
Averages
16.60
High
26.00
About SOUN
SoundHound AI, Inc. is engaged in conversational intelligence, offering voice and conversational artificial intelligence (AI) solutions that let businesses offer experiences to their customers. Through its proprietary technology, its voice AI delivers speed and accuracy in numerous languages to product creators and service providers across retail, financial services, healthcare, automotive, smart devices, and restaurants via AI-driven products, such as Smart Answering, Smart Ordering, Dynamic Drive Thru, and Amelia AI Agents. Along with SoundHound Chat AI, a voice assistant with integrated Generative AI, it powers various products and services, and processes billions of interactions each year for businesses. Its developer platform, Houndify, is an open-access platform that allows developers to leverage its Voice AI technology and a library of over 100 content domains, including commonly used domains for points of interest, weather, flight status, sports and more.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
