2024 has been the 12 months of the factitious intelligence (AI) increase. Mega-cap shares like Nvidia and Broadcom have soared to unbelievable heights because of their publicity to the AI trade.
Nonetheless, the emerging AI sector consists of extra than simply the large chipmakers; it additionally consists of AI software builders. So, let’s dig into one such firm, SoundHound AI (SOUN 15.38%), to see why it is a identify traders must know forward of 2025.
Picture supply: Getty Photographs.
What does SoundHound AI do?
In a nutshell, SoundHound AI is a voice AI firm, that means it develops software program that helps people talk with AI fashions. Most individuals are conversant in how this works. For instance, for those who’ve ever requested an Amazon Alexa-enabled machine a query, your voice was used to set off a response from an AI mannequin.
Nonetheless, one factor that units SoundHound aside is that in contrast to Amazon’s Alexa, Apple‘s Siri, or different big-tech sponsored gadgets, SoundHound is a comparatively small firm centered on simply voice AI. That’s, SoundHound’s AI instruments aren’t linked to particular branded {hardware}, like an Amazon Echo or Apple iPhone. As an alternative, SoundHound works with purchasers to combine voice-enabled AI options utilizing their personal tools.
Accordingly, corporations that could be hesitant to share their information and introduce massive tech to their operations (and, in flip, their clients) could also be extra snug with an organization like SoundHound. What’s extra, SoundHound can be a pacesetter within the house. It helps 25 languages and may perceive many accents inside its language library.
Lastly, the proof is within the pudding. International manufacturers like Kia, Honda, and Krispy Kreme have adopted SoundHound’s expertise due to its pace, accuracy, and talent to ship real-time, humanlike dialog.
How are SoundHound AI’s financials?
Turning to the corporate’s financials, it is essential to notice that SoundHound is squarely within the progress stage of its lifecycle. At this level, SoundHound wants to extend its revenue by touchdown new purchasers and increasing its relationships with present purchasers.
And on that entrance, the corporate is performing nicely. Whole income in its most up-to-date quarter (ended Sept. 30) grew to $25 million, up 89% from a 12 months earlier.
Furthermore, SoundHound’s consumer base has expanded, thus reducing its reliance on any explicit buyer.
For instance, one 12 months in the past, the corporate’s largest consumer accounted for 72% of SoundHound’s income; as we speak, its largest consumer supplies solely 12% of its whole income. Equally, automotive clients represented 90% of SoundHound’s buyer base one 12 months in the past and now symbolize lower than 25%.
To sum up, SoundHound AI is rising its listing of consumers as the corporate expands into new industries like healthcare, monetary companies, and insurance coverage whereas maintaining its already established partnerships within the restaurant and automotive sectors.
Is SoundHound AI inventory a purchase now?
It ought to go with out saying that SoundHound AI is not a inventory for each investor. The corporate has but to show a revenue and doesn’t generate constructive free money circulation. That places the inventory out of bounds for worth traders or these searching for passive income from their investments.
Nonetheless, for growth-oriented traders, SoundHound is a inventory price contemplating. Its fast income progress, coupled with its cutting-edge voice AI expertise, make it a compelling alternative for traders searching for shares in a hypergrowth inventory throughout the AI sector.
John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Jake Lerch has positions in Amazon and Nvidia. The Motley Idiot has positions in and recommends Amazon, Apple, and Nvidia. The Motley Idiot recommends Broadcom. The Motley Idiot has a disclosure policy.
