SoundHound AI (NASDAQ:SOUN) stock has been a major beneficiary of the market’s infatuation with all things AI. That is clearly evident in the simple fact the shares have soared by an extraordinary 864% throughout the year.
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But while the stock was already a big 2024 winner, bullish sentiment has recently gone into overdrive, with the stock appreciating by 168% over the past month.
The outperformance, says H.C. Wainwright analyst Scott Buck, is down to several factors, including growing demand for its AI-powered services. This includes recent contracts with Church’s Texas Chicken and Torchy’s Tacos, which together operate over 1,600 restaurant locations. Additionally, recent acquisitions have positioned the company to expand its reach beyond the restaurant sector into areas like retail, healthcare, and financial services. Buck also makes the case that the company has benefited from a favorable environment for small-cap growth names, with falling interest rates playing a part. Furthermore, the analyst thinks there is “scarcity value among pure play artificial intelligence companies,” that justifies a “premium multiple.” Lastly, with its market cap now surpassing $7.0 billion, the company has become a “portfolio candidate for larger institutional money managers,” thereby broadening its potential investor base.
The question, though, is whether after delivering such huge gains over a short period of time, the stock represents good value right now. Buck concedes that at the current share price, valuation levels “may look stretched,” but the analyst thinks the company has developed a scalable platform that over time will enable revenue, adjusted EBITDA, and ultimately earnings, to catch up to the share price. “While we acknowledge that share appreciation rarely moves in a straight line, we fully expect SOUN shares to trade at a higher level at year-end 2025,” Buck went on to say.
Based on all the above, then, Buck has raised his price target all the way from $8 to a Street-high of $26, implying gains of 27% are in store for the coming year. It hardly needs adding but Buck’s rating stays a Buy. (To watch Buck’s track record, click here)
The Street’s other current SOUN reviews split into an even 2 Buys and Holds, each, making the consensus view here a Moderate Buy. However, the average target tells an entirely different story. At $8.1, the figure implies shares will be changing hands for a 60% discount a year from now. Given the discrepancy between rating and price target, It will be interesting to see whether analysts downgrade their ratings or update their price targets shortly. (See SoundHound AI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
