Title: Will This AI Stock Continue to Shine in 2025, Following a Staggering 578% Gain?
2025 is fast approaching, and the stock market is leaving a significant mark on 2024's history books. The S&P 500 has broken through its all-time high an impressive 50 times, and while there are numerous reasons for this surge, such as a stable economy and the Federal Reserve's interest rate adjustments, the excitement surrounding artificial intelligence (AI) may have played the largest role. Some worry that the stock market is in a bubble or at least overreaching, and it's true that certain stocks appear overvalued. However, the AI market is exploding, and it won't be slowing down anytime soon.
Let's take a closer look at one of the AI market's brightest stars: SoundHound AI (SOUN -16.44%). In 2024, their stock has skyrocketed a staggering 578%, and it's not hard to see why.
SoundHound's unparalleled market opportunity
The financial implications of conversational speech recognition are enormous. Companies can save millions of dollars on labor costs by implementing this technology, particularly in areas like fast food drive-thrus and customer service. Many notable corporations, like White Castle, Papa John's, Applebee's, and more, are already testing or employing SoundHound's tech. In fact, Torchy's Tacos recently rolled out SoundHound's technology at their locations.
But it's not just the food industry that stands to benefit from this revolutionary technology. SoundHound's conversational speech recognition tech is also revolutionizing the automotive sector. The tech can provide answers to complex questions like "What's the most scenic route?", "What will the weather be like in Detroit this weekend?", or "Where is a nearby Italian restaurant, and what is the fastest way to get there?" This is a vast improvement from the once common "call so and so" and "play music" commands.
According to Statista, the conversational speech recognition market is set to double by 2030. SoundHound's revenue growth is even more impressive, outpacing the market's growth.
Is SoundHound stock a worthwhile investment in 2025?
SoundHound reported an impressive 89% year-over-year increase in revenue to $25 million in the third quarter. The company has also significantly expanded its customer base in 2024. SoundHound expects their 2024 revenue to reach $82 million to $85 million, with the midpoint of $165 million potentially doubling their 2025 revenue.
However, investors need to be aware that while SoundHound is growing rapidly, the company is not yet profitable, and it doesn't produce positive cash flow from operations. This makes the stock a slightly riskier investment compared to profitable companies, even with its precious revenue growth.
SoundHound's valuation has also been called into question after a recent 171% surge in the past 30 days, which saw the stock price soar to 33 times its potential 2025 sales of $165 million. Analysts have set an average price target of $8.07 for SoundHound, well below its current price of $14.62. While SoundHound's growth potential is compelling, investors might want to consider waiting for a pullback before diving in.
The AI market is a wild and exciting frontier, and SoundHound AI is a player to watch. With its significant revenue growth and market opportunities, now could be the perfect time to keep a close eye on this company. Just remember, as with any investment, it's always a good idea to do your own research and consider seeking the advice of a financial advisor.
In light of the AI market's projected doubling by 2030, according to Statista, investing in companies like SoundHound that are revolutionizing conversational speech recognition could be a lucrative opportunity. SoundHound's third-quarter revenue growth of 89% and expectations of doubling their 2025 revenue demonstrate its potential as an investment, despite its current non-profitability.
