Can SoundHound AI Double? What the Fundamentals and Deals Reveal

Key Points

• SoundHound AI stock has demonstrated its potential to double in value in the current market, and its financial growth supports this narrative.
• Analysts reiterate their upside targets after a 100% growth in revenue from a strategic acquisition was made.
• Institutional capital is flying into SoundHound stock this quarter as well.

The world of artificial intelligence is starting to spread to different areas of everyday life, and the technology sector is one of the places where investors can still look today for a few of the best setups in the coming months. Despite the recent volatility spikes seen in the S&P 500 index, some stocks have still managed to attract new optimism from Wall Street and other institutional investors, which is the case for today’s pick.

Shares of SoundHound AI Inc. NASDAQ: SOUN have traded to such a low level in today’s market, with a massive 50.3% decline on a year-to-date basis so far. The size of this decline and bearish momentum should have started to turn some investors (and analysts) away from considering the company a buy. However, that is not the case in today’s setup for the company, which points to a potential double from where the company trades today.

Some bears might lean on the belief that SoundHound doesn’t have any advantage over other names in the speech-to-sound industry. However, that is not true. This company has the most advanced proprietary technology to make a more real-time and realistic transition between a user’s speech and a device understanding and taking on the desired action better than most other platforms.

Underlying Growth at Undeniable Discounts

As of the second half of 2024, SoundHound undertook the acquisition of Amelia, significantly expanding its scale and reach in the conversational AI space. The $80 million acquisition would immediately boost SoundHound’s financial position, justifying potentially higher valuations in the coming quarters.

Looking at the company's latest quarterly earnings release, investors can see that SoundHound reported up to $34.5 million in net revenue, representing a massive growth rate of as much as 101% over the past 12 months. This type of growth is the result of management making the right strategic decision to buy Amelia, which is set to create even more value for the following reports.

Considering that the stock now trades at only 39% of its 52-week high, investors can look to this massive growth trajectory SoundHound has been on and safely assume that the price definitely does not reflect the underlying fundamentals of the company, but that is an inefficiency some in the market have started to tackle recently.

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Optimism Starts for SoundHound Stock

Over the past quarter, reports of institutional investment show that up to $444 million worth of SoundHound stock has been purchased by these buyers in a bold bet to ride what seems to be an apparent wave of higher prices.

Leading the way in this buying wave were those from Geode Capital Management, who decided to boost their holdings in SoundHound by as much as 4.4% as of February 2024, bringing their net position to a high of $149 million today, or 1.9% ownership in the company.

On a broader note, investors can start to decrypt the market’s outlook for the company moving forward, and this can be done by spreading the current valuation metrics compared to the rest of a peer group or specific industry today. On a price-to-book (P/B) ratio, SoundHound now trades at a massive 197.2x valuation, commanding a steep premium to the computer sector’s average of 6.2x.

Some investors might call this an expensive or overextended name. In contrast, seasoned investors will remind them that the market is always willing to overpay for companies and stocks that it expects to outperform the specific industry and the overall market. The current fundamental setup does justify this view of SoundHound stock.

Wall Street analysts have also come in to reiterate the recent optimism that is taking over SoundHound today. Even though the current consensus price target is set for $12.9 per share, calling for as much as a 30.4% upside from where the stock trades today, other analysts are calling for a much higher trajectory in the company.

Analysts from HC Wainwright decided to reiterate their Buy rating as of March 2025, this time placing a much higher price target of as much as $26 per share. This new target calls for a new 52-week high in the stock and a net implied upside of as much as 163% from today’s low prices.