The Motley Fool: SoundHound AI has soared 1,000% in 2024

Quotes on SoundHound AI, a developer of voice assistants, has soared over 1,000% for the year to date, reports the Motley Fool. While this rally makes it one of the year’s best-performing stocks, the Motley Fool warns that the company may be overvalued.

Details

On Thursday, December 26, SoundHound AI stock spiked almost 20% to a record high of $24.20 per share. The Motley Fool points out that this rally makes it one of the best-performing stocks in 2024.

“With speculative growth stocks seeing strong bullish momentum, investors appear to be bidding SoundHound up with recent bullish coverage from analysts in mind,” explains the Motley Fool.

On December 16, Wedbush described the company as “underappreciated” and more than doubled its target price from $10 per share to $22 per share. This led to a 16.5% jump in SoundHound AI to $19.70 per share, the highest closing price for the stock at the time. A week later, on December 23, HC Wainwright followed suit, raising its target price from $8 per share to $26 per share. While it admitted that the upgrade had been driven by market exuberance, it still believes the company will be able to meet such expectations, the Motley Fool notes.

However, the consulting firm cautions that if SoundHound AI’s growth comes in worse than expected or if macroeconomic conditions worsen (or both), the stock could be riled by high volatility. SoundHound AI stock stands to lose half its value over the next two years if it does not live up to its own “lofty” expectations, warns the Motley Fool.

For investors

SoundHound AI develops AI-powered voice assistants. Its solutions are integrated into vehicles from Stellantis, which owns several brands, including Jeep and Dodge. The company also partners with BNP Paribas, Hoffman Financial Group, and Nordic Bank, as well as food service companies that use its technologies to automate customer service.

Another partner is Nvidia. According to the Motley Fool, the chipmaker is working to integrate SoundHound’s voice assistant into its DRIVE platform. Furthermore, Nvidia owns SoundHound shares, equivalent to a stake of about 0.5% as of the end of the third quarter, according to MarketWatch.

SoundHound AI’s business is “growing like there’s no tomorrow,” the Motley Fool wrote in October, spotlighting it as one of two stocks with far more upside than any of the Magnificent Seven names.

In the third quarter of 2024, SoundHound reported record revenue of $25.1 million, up 89% year over year. However, the company is still loss-making, with a GAAP net loss of $21.8 million for the quarter.

According to MarketWatch, out of the seven analysts covering SoundHound AI, five have a “buy” recommendation, two rate it a “hold,” and no one has it as a “sell.”