Up more than 500% in 2024, can SoundHound AI keep rising?

Key points

• SoundHound AI stock is up nearly 540% YTD.

• The company is a leader in AI voice technology.

• Is the stock still a buy?

SoundHound AI has been on an incredible run. Is it still a buy?

Few stocks have enjoyed the type of run that SoundHound AI (NASDAQ: SOUN) has this year. The AI stock, which specializes in AI voice technology, is up about 540% this year, and has more than doubled in just the past month.

SoundHound AI stock surged higher again on Thursday, rising some 33% to over $13 per share.

Is it too late for investors to jump on this stock or is it just getting started?

Taco Thursday

At the start of 2024, SoundHound AI stock was trading at just over $2 per share. Since then, this penny stock has surged about 540% year-to-date to over $13 per share.

A significant portion of the gain has come within the last month, as SoundHound AI stock was trading at around $5.25 per share on November 1. It has since erupted 157%.

It was the day’s top gainer on Thursday after the company announced another win, landing a deal with Torchy’s Tacos. The taco chain, with some 130 locations in the U.S., will soon rollout SoundHound’s advanced voice AI Smart Ordering product.

The voice AI ordering system takes customer orders, including handling multiple calls and orders simultaneously. In addition to taking food orders, it answers common questions about menu items, specials, and store hours, among others.

“Partnering with SoundHound and using their Smart Ordering system, we are able to give our guests another way to easily order our food,” Thai Tran, chief technology officer at Torchy’s Tacos, said. “We know that they’ll get an easy-to-use option that ensures their orders are accurate, done on time, and they get the service they have come to expect from us. And it allows our team to be more efficient so we can elevate the total guest experience.”

Also, in mid-November, SoundHound AI announced that its Amelia AI voice agents had handled more than 100,000 calls for its customer Apivia Courtage, a French insurance company. The service reduced the number of queries handled by the customer relations team by nearly 20%. 

Further, SoundHound recently expanded its relationship with Kia to deploy its voice AI technology in Kia cars sold in India.

Guidance raised for fiscal 2024 and 2025

Another catalyst for SoundHound AI this past month was its third quarter earnings report, which showed an 89% increase in revenue.

The firm has benefitted from the acquisition of Amelia, another AI voice technology company, earlier this year. Amelia expands SoundHound into industries that it had not had a presence in, like financials, insurance, and healthcare. It has also helped SoundHound diversify its revenue base. Currently, its largest customer represents 12% of revenue, compared to 72% a year ago.

SoundHound’s momentum should carry into 2025 and beyond. The company raised its revenue expectation for fiscal 2024 to $82 million to $85 million. That’s up from the previous guidance of $80 million.

It also boosted its revenue outlook for 2025 to a range of $155 million to $175 million. That is up from previous guidance of $150 million and would be about 80% higher than 2024.

Is SoundHound AI stock a buy?

SoundHound AI is not yet profitable, with a $21.7 million net loss in the most recent quarter. But it is moving toward profitability. On the Q3 earnings call, CFO Nitesh Sharan said the company expects to achieve adjusted EBITDA profitability by the end of 2025.

This is all good news, but given its rapid rise, investors should be cautious about buying at the top of a run. SoundHound AI stock has a price-to-sales ratio of 46, twice what it was in September.

But this is definitely a long-term stock to put on your radar. It is one of the leaders in a field that is booming, so look for the right opportunity and timing to get in.