Earlier this year when it became known Nvidia had a stake in SoundHound AI (NASDAQ:SOUN), shares of the voice recognition specialist went on one almighty run.
But just as fast as it took the stock to take off, its descent has been as just as impressive. By now most of those gains have been given back to market with the shares falling by 60% since the mid-March peak.
The question investors face when looking at such volatility is whether the stock’s jump was just a flash in the pan, or might the big pullback represent an opportunity?
Investor Chetan Woodun belongs in the latter group and cites 3 reasons why SOUN stock is a Buy. (To watch Woodun’s track record, click here)
For one, while Nvidia’s $3.7 million investment is a rather small one, the fact an AI giant such as Nvidia is keen on the company sets SoundHound “apart from other Voice AI companies.”
Secondly, Woodun also believes SoundHound’s integration of Gen AI models and its “ability to launch products quickly” have helped fuel its revenue growth. This knack for delivering the “right product at the right time” not only prevented a decline in revenue during Q2 and Q3 last year but also contributed to significant year-over-year growth of 47% in 2023. “This is higher than peers which also diversified into Gen AI,” says Woodun.
Lastly, while the company remains a loss-making entity, it is improving on that front. In Q4, for instance, the company’s earnings were a net loss of ($0.07), compared to ($0.15) in the same period a year ago, amounting to a 53% improvement, while adj. EBITDA showed a loss of $3.7 million, a far better display vs. the negative $18.8 million it delivered in the year-ago quarter.
And as Woodun notes, management is eyeing profitability by the end of 2025, based on sales of $100 million, up from the $46 million generated last year and the $70 million anticipated in 2024.
Like Woodun, most on the Street also clock an opportunity here; the stock’s Moderate Buy consensus rating is based on 4 Buys against 1 Hold and Sell, each. There are plenty of gains projected too; at $7.15, the average price target factors in one-year returns of 89%. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured expert. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
