SoundHound AI (NASDAQ:SOUN) shares began the year on a sour note, plunging as much as 35% at their lowest point. Yet, the stock made a comeback yesterday, surging 21%, driven by positive updates.
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The voice AI pioneer revealed a strategic partnership with Rekor Systems to introduce innovative services for police and emergency vehicles. Additionally, the stock gained further traction following President Trump’s decision to repeal Biden-era regulations on AI research and development, which bolstered market sentiment toward the sector.
Overall, SoundHound AI shares are up by a huge 793% over the past 12 months. As one of the standout performers in the AI space, it continues to captivate investors.
H.C. Wainwright analyst Scott Buck underscores this enthusiasm, noting: “We recommend investors take advantage of recent weakness to accumulate a position ahead of stronger operating results in 2025.”
Buck’s comments come in the wake of a recent meeting with SOUN management at CES, where the company showcased various AI product use cases in automotive, restaurant, and call management services.
A highlight for Buck was the demonstration of the voice commerce ecosystem, which the company has touted as its “pillar three opportunity.” This enables SoundHound-enabled vehicles to seamlessly connect with SoundHound-enabled restaurants, facilitating order generation and improving consumer convenience.
Though still in its early stages, Buck thinks the product presents “multiple potential avenues of monetization,” such as earning a percentage of ticket sales, charging a flat fee, or implementing a convenience fee for customers. Revenue from these fees could be shared with auto manufacturers, thereby incentivizing the integration of SoundHound AI systems.
With roughly 10 million SoundHound-enabled vehicles currently on North American roads, the company estimates that partnering automakers could generate up to $500 million annually. A 50% revenue share could translate to an additional $500 million in annual revenue for SoundHound – more than three times Buck’s current 2025 revenue forecast.
“While still somewhat developmental, we believe this product could begin to see a wider release as early as 2H25, well ahead of our expectations and at greater scale than we previously had imagined,” Buck explained. “As a result, a successful deployment could result in revenue well beyond our current forecast and potentially accelerate the company’s timeline to profitability.”
Buck thinks that, over time, the company’s accelerating revenue growth along with heightened investor interest due to the limited number of pure-play AI companies out there, should justify a premium valuation. As the company executes its current business strategy, meets its 2024 and 2025 revenue targets, and potentially achieves operating profitability by 2026, Buck anticipates new investors will get on board.
To this end, Buck rates SOUN shares as a Buy, along with a Street-high $26 price target, implying the stock will gain 57% in the year ahead. (To watch Buck’s track record, click here)
The bulls and fencesitters are equally represented here with the stock claiming 2 Buys and Holds, each, all for a Moderate Buy consensus rating. The average target stands at $15.25, a figure that factors in a 12-month downside of ~8%. It will be interesting to see whether the analysts downgrade their ratings or upgrade price targets over the coming months. (See SOUN 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.
