Key Points
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SoundHound’s business has grown via acquisitions, and they could help position it for more growth ahead.
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The AI voice generators market is expected to grow at nearly 30% annually.
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The stock has considerable upside, but there’s still ample risk with this investment.
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Investing in a top artificial intelligence (AI) company can be a great way for investors to amass some significant returns. Taking a chance on a modestly valued AI stock may yield even greater gains, enabling growth investors to double their money (or more).
SoundHound AI (NASDAQ: SOUN) has a relatively modest market cap of $2.7 billion, and it’s the type of small-but-growing business that may have investors bullish about its future. Although it’s been struggling this year and is down around 37%, its low valuation could prove to be enticing, given the opportunities in voice AI. Could the tech stock double in value in the near future?
SoundHound AI’s business has some encouraging growth opportunities ahead
In recent years, SoundHound has been on an acquisition spree to both diversify and expand its presence in the voice AI space. Recently, it launched its Oasys agentic platform, where AI can learn and improve on its own, enabling agents to get better over time.
With significant opportunities in the space, SoundHound doesn’t even need to capture a large share to see its valuation grow. According to projections from Grand View Research, the AI voice generators market is growing at a compounded annual growth rate of 29.5% and will be worth approximately $21.8 billion by 2030. It highlights SoundHound as one of the leading players in the market, as businesses look for personalized AI assistants.
SoundHound has already been generating strong results; however, they’ve largely been driven by acquisitions, boosting its sales. During the first three months of the year, SoundHound’s revenue rose by 52%, totaling $44.2 million. The big challenge will be maintaining a high growth rate while also keeping its costs down, as the company also incurred a net loss of $25 million during the quarter, as it continues to struggle to stay out of the red.
The stock has plenty of upside, but it also carries risk
SoundHound’s stock is down around 50% over the past 12 months, so even if it were to return to where it was a year ago, it would have doubled in value from where it trades today. Thus, it’s not an outlandish scenario to consider, but SoundHound needs to do more than just grow through acquisitions.
It won’t be easy with so much competition in AI these days. That’s why, while SoundHound may have significant growth potential, it’s not a sure thing. This stock might appeal to growth investors, but it may only be suitable for those with a high tolerance for risk.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool has a disclosure policy.
