Speech recognition specialist SoundHound AI Inc. (NASDAQ: SOUN) has experienced a remarkable surge in 2024, with its stock price rising by 134.2% year-to-date.
This growth is largely attributed to strategic initiatives, particularly the acquisition of Amelia AI for $80 million. Amelia’s conversational and generative AI capabilities are expected to significantly enhance SoundHound’s product offerings, enabling expansion into new sectors such as financial services, insurance, and healthcare.
This acquisition is anticipated to contribute over $45 million in revenue by 2025, reinforcing SoundHound’s growth trajectory.
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Strategic acquisition enhancing growth
SoundHound’s Q2 2024 results underscored its strong operational performance, with revenue increasing by 54% year-over-year to $13.5 million. This growth was driven by continued expansion in its automotive and restaurant verticals.
In the automotive sector, the company expanded its AI voice assistant integration across several Stellantis (NYSE: STLA) brands and is poised to launch its technology with a major U.S. electric vehicle manufacturer.
On the restaurant front, SoundHound has secured new contracts, including a major pizza chain and two coffee chains, further boosting its presence with AI-driven solutions like phone ordering and employee assist systems.
Despite these positive developments, SoundHound remains unprofitable, with an adjusted EBITDA loss widening to $13.8 million from $10.1 million in the same quarter last year.
However, the company’s cumulative subscriptions and bookings backlog approximately doubled year-over-year to $723 million, indicating strong future revenue potential.
The acquisition of Amelia is expected to unlock substantial cross-selling and upselling opportunities, contributing to SoundHound’s projected revenue growth.
Collaborations strengthening market position
Collaborations with major brands such as Nvidia (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), and Hyundai have further solidified its position in the AI industry.
The company’s recent payoff of $100 million in debt, leaving it with a strong liquidity position of $180 million, supports its ability to invest in capturing increasing customer demand for its voice AI solutions.
As of August 14, SoundHound is trading at $4.99, with ongoing positive price momentum. The stock’s price-to-sales (P/S) ratio stands at 24.95x, significantly higher than the industry average of 6.5x, suggesting that investors are pricing in substantial growth expectations.
In this context, Finbold has leveraged ChatGPT-4o, OpenAI’s advanced and recent AI chatbot model, to offer insights into how SOUN is likely to trade by the end of Q3, considering the key factors influencing SOUN’s future price trajectory.
ChatGPT-4o SOUN stock price prediction
Given the recent developments and SoundHound’s strong backlog, the AI model has set a price target of $7.50 for the end of Q3 2024. This target represents a potential upside of approximately 50% from the current price.
The recent acquisition of Amelia and rapid expansion in the automotive and restaurant sectors have already begun to positively impact SoundHound’s financial outlook, setting the stage for significant revenue growth that could materialize in the stock price as early as the end of Q3.
Moreover, ongoing rollouts of AI voice assistants across Stellantis brands and new contracts with major restaurant chains are likely to generate additional investor enthusiasm and market momentum during Q3, potentially accelerating the stock price increase.
If these positive trends continue, SoundHound AI’s stock could see substantial gains by the end of Q3, making it a compelling option for investors looking to capitalize on the booming AI market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
