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SOUN Stock Skyrockets 866% in a Year: Should You Buy, Sell or Hold?

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SoundHound AI (SOUN - Free Report) shares have soared 866.3% in the trailing 12 months, outperforming the Zacks Computer and Technology sector’s appreciation of 23.4% and the Zacks Computers – IT Services industry’s return of 9.1%.

SOUN shares have been riding on a rich partner base and a growing clientele for its innovative solutions. It offers fully integrated, proprietary solutions in 25 languages on both cloud-enabled and hardware-embedded devices.

With a massive estimated total addressable market of more than $140 billion and significant barriers to entry, SoundHound AI enjoys a distinct competitive advantage. SOUN currently has above 270 patents, with more than 155 patents granted and over 115 pending.

One-Year Performance

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Expanding Partner Base Bodes Well for SOUN’s Prospects

SoundHound AI’s partnership with Rekor Systems (REKR - Free Report) is combining the latter’s vehicle recognition software, Rekor Scout, with SOUN’s voice and conversational AI to create hands-free, voice-controlled systems for law enforcement and first responders. It aims to make emergency vehicles safer, more efficient and easier to use during critical situations.

SOUN partnered with Lucid Group (LCID - Free Report) to launch the Lucid Assistant, a hands-free voice assistant for controlling vehicle functions. Powered by SoundHound Chat AI with generative AI technology, it improves in-vehicle experience with real-time data and intuitive controls.

In the India market, SoundHound AI expanded its partnership with Kia, adding Hindi language capabilities to several models. It is also offering voice AI assistance to VE commercial trucks, which is a joint venture between Volvo and Eicher.

In the restaurant sector, SOUN has collaborated with Church’s Texas Chicken to provide a voice AI-powered drive-thru solution. The system provides instant, human-like interaction and improved order accuracy by ignoring off-topic speech.

SoundHound AI partnered with Torchy’s Tacos to launch SOUN’s Smart Ordering voice AI at the latter’s 130 locations. The system, trained on Torchy’s Tacos menu, handles 100% of calls, processes customized orders, and answers menu or store-related queries.

Strong Portfolio Aids SOUN in Winning Clients

In the commercial automotive industry, SOUN has introduced its advanced SoundHound Chat AI voice assistant, integrated with ChatGPT, into Peugeot, Opel, Vauxhall, Alfa Romeo, Citron and DS Automobiles vehicles across 11 European markets like Austria, France, Germany, Italy, Spain and the U.K.

SOUN’s products like Smart Answering, Smart Ordering, Employee Assist, Customer Experience, Employee Experience and Dynamic Drive Thru are used by an expanding client base, which includes popular names like Panda Express, White Castle, Firehouse Subs, Five Guys, Firehouse Subs and Chipotle Mexican Grill (CMG - Free Report) .

SoundHound AI’s client base spans sectors like healthcare, telecom and hospitality, and includes industry leaders like Telefonica, MUSC Health, Aveanna Healthcare, Truity Credit Union, Sterling National Bank and Turret.

SOUN’s Positive Outlook for 2025

SoundHound AI expects revenues between $155 million and $175 million for 2025.

The Zacks Consensus Estimate for SOUN’s 2025 revenues is pegged at $162.99 million, indicating a year-over-year surge of 94.91% from 2024’s estimated figure of $83.63 million.

The consensus mark for SOUN’s 2025 loss is pegged at 27 cents per share, unchanged over the past 60 days. The company is expected to report a loss of 38 cents in 2024.

SOUN beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average earnings surprise being 1.25%.

 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

SOUN Stock Overvalued

SoundHound AI’s stock is overvalued at present, as its Value Score of F suggests.

The company’s shares are trading at a significant premium with a forward 12-month price/sales of 31.58X compared with the broader sector’s 6.46X.

Price/Sales Ratio (F12M)

 

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Image Source: Zacks Investment Research

 

What Should Investors Do With SOUN Stock?

SoundHound AI’s impressive growth, strong partnerships and innovative solutions position it as a major player in the AI-driven voice technology space. It has a diverse and expanding client base across industries, and a positive outlook for 2025.

However, SOUN is still a risky bet in the voice AI domain, a capital-intensive industry. SoundHound AI reported an EBITDA loss of $15.9 million in the third quarter of 2024, led by heavy spending on research and development, and strategic acquisitions to stay competitive. While these investments may fuel long-term growth, they can strain near-term profitability.

SOUN aims to achieve positive adjusted EBITDA by the end of 2025, but economic uncertainties can delay progress. These factors can drag down shares in the near term.

SoundHound AI currently has a Growth Score of F, which means it is not an ideal investment for growth-oriented investors. Its stretched valuation is concerning.

SOUN currently carries a Zacks Rank #3 (Hold), suggesting that investors should wait for a better entry point to add the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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