SoundHound AI (NASDAQ:SOUN) hit a high note in 2024, with shares skyrocketing nearly 750%. Though AI hype certainly played a part in the company’s meteoric rise, SOUN has plenty of specific achievements to trumpet.
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The company reported significant growth in orders, a rise in revenues, and brighter forecasts. To top it off, the tech giant Nvidia secured a stake in the company, underscoring its potential.
Despite the strong performance, top investor JR Research, who sits in the top 2% of TipRanks’ stock pros, is urging caution when it comes to the white-hot stock.
“The competitive landscape in Voice AI is far from established, and SoundHound’s position is tenuous at best,” warns the 5-star investor.
JR highlights the risk of larger AI players entering the lucrative voice AI market, potentially overshadowing SoundHound and eating into its revenue stream.
“Do we really want to keep chasing this stock much higher, while assuming that big tech and other AI companies aren’t aware of the burgeoning opportunity?” asks JR rhetorically.
Moreover, while the company boasts high accuracy levels of 95%, JR points to the reputational risks tied to applying Generative AI in customer service processes – a challenge that could weigh on its long-term prospects.
Still, there are plenty of reasons that JR remains excited about the company’s prospects. SoundHound projects a $140 billion total addressable market, with FY 2024 revenues expected to hit $85 million – leaving substantial room for growth. Furthermore, the company’s trajectory toward profitability provides additional reassurance.
And yet, the rapid increases over the past few months have pushed the stock just a bit too high for JR.
“This isn’t the time for you to jump on the SOUN bandwagon,” advises the investor. JR Research is therefore giving SOUN shares a Hold (i.e. Neutral) rating. (To watch JR Research’s track record, click here)
The views on Wall Street reflect mixed sentiment, with 3 Buy and 2 Hold ratings, giving SOUN a consensus Moderate Buy rating. However, its 12-month average price target of $8.10 implies potential losses of ~60%. It will be worth watching these analysts to see if they revise their rating – or their price target – in the coming months. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
