Soundhound AI (Soun) shares have gained attention, climbing over 22% in the last month. While this rise has caught the eye of investors, many are pondering whether there’s still potential for further growth in AI voice stocks. Here are three key reasons why Soun might keep ascending despite recent gains.
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For a bit of context, Soundhound AI is known for its work in speech recognition and natural language processing, offering AI-driven solutions across various sectors.
1. Strong Second Quarter Results from Soundhound
Last month, Soundhound announced its second-quarter earnings, reporting a record revenue of $42.7 million, marking a 217% increase compared to the previous year. They posted an adjusted net loss of $0.03 per share, which was notably better than the anticipated loss of $0.09, and also an improvement from last year’s $0.04 loss.
The company is witnessing robust demand for its voice AI solutions and an expanding range of products. Although it hasn’t turned a profit yet, the rapid revenue increase and positive outlook hint at significant long-term potential. On the flip side, fierce competition could exert pressure on stocks and makes Soun a somewhat risky investment.
Looking ahead, they have raised their revenue forecast for the year, now estimating between $157 million and $177 million, with analysts hopeful for around $161.2 million.
2. Wall Street Shows Confidence in Soun
Several analysts on Wall Street have reaffirmed their endorsements of Soun following its second-quarter results, indicating strong confidence in its growth trajectory.
For instance, Michael Latimore, a four-star analyst at Northland Securities, upgraded Soun from Hold to Buy, increasing his price target from $8 to $14.5. He forecasts a 36% growth for the second half of the year and a 52% surge in the fourth quarter, signaling a 7% potential upside.
Meanwhile, Glenn G. Mattson, a five-star analyst at Ladenburg Thalmann, has also upgraded and purchased Soun, raising his target price from $9 to $16.
3. Potential Opportunity in Soun’s Recent Pullback
Despite its recent rally, Soun shares have decreased by approximately 34.7% since the beginning of the year. As a relatively new player in the voice AI space, the company’s stock can experience significant fluctuations based on investor sentiment.
This volatility may raise some concerns in the near term, but it could also present attractive buying opportunities for those looking to invest for the long haul.
What is Soun’s Price Target?
The consensus rating for Soun from Tipranks shows a moderate buy, with five buys and two holds noted over the last three months. The average stock price target stands at $15.00, indicating a potential upside of about 16.10% from its current level.
