Anticipated Gain: Two Stocks Set to Surpass SoundHound AI's Value Within a Year
SoundHound's meteoric rise in the past year, fueled by phenomenal growth and a small investment from tech giant Nvidia, has brought its market cap to an impressive $4.7 billion. However, the stock's prone to wild swings, currently down 35% despite no company-specific reasons. Investors may be selling due to its high valuation, trading at 58 times sales, more than giants like Nvidia.
The steep valuation indicates a potential drop of nearly 30%, with a 12-month median price target of $9. But looking ahead, alternatives like C3.ai and DigitalOcean seem promising.
C3.ai could surpass SoundHound's market cap if it hits its $40 target, a 30% increase from current levels, with its market cap jumping to almost $5.2 billion. This prospect is plausible given the company's solid revenue growth and 29% increase in Q2 2025 revenue to $94.3 million. C3.ai's growth has accelerated, an 800% increase in agreements through partners like Google Cloud in the past year.
Another promising alternative is DigitalOcean, which provides cloud infrastructure and now offers AI-focused services using Nvidia GPUs. The company's ARPU increase of 11% to $102.51 in Q3 2024 points to a potential increase in revenue and earnings in the coming year. Despite DigitalOcean's pipeline growth, it's currently relatively undervalued at a price-to-sales multiple of 4.4, qualifying it as a potential bargain.
Both companies possess strong growth potential and reasonable valuations, making them attractive alternatives to SoundHound in the AI boom.
In light of SoundHound's high valuation and potential drop, some investors might be considering diversifying their finance portfolio by investing in alternatives like C3.ai or DigitalOcean. The undervalued DigitalOcean, with a price-to-sales multiple of 4.4, could provide a good return on money if its growth trajectory continues.
