SoundHound AI (NASDAQ:SOUN) has made a lot of waves this year. Despite pulling back from its earlier highs, the stock has delivered some huge gains for investors, driven by the growing enthusiasm for AI and supported by an investment from Nvidia.
Not all, however, have warmed to the story, with skeptics claiming the company is not really poised to make long-term bank from AI, but rather playing it fast and loose with the facts regarding its positioning in the AI space.
That said, investors seemed happy enough with the company’s Q1 results. The shares saw out the subsequent session 7% into the green after the provider of conversational AI solutions beat expectations on both the top-and bottom-line during the quarter.
Showing robustness in both automotive and restaurants, revenue climbed by 73% year-over-year to $11.59 million, beating the analysts’ call by $1.49 million. And given sturdy product royalties and strength in the automotive business, the company’s subscription and bookings backlog rose to $682.0 million, amounting to an 80% increase compared to the same period a year ago. On the bottom-line, adj. EPS of -$0.07 edged ahead of the forecast by $0.01.
The company delivered on the guide too, now expecting full year 2024 revenue in the range between $65 million to $77 million (up from between $63 million to $77 beforehand), at the midpoint above consensus at $69.49 million. The company also reiterated its outlook for $100.0+ million revenue in FY25 while expecting to reach positive adj. EBITDA in 2025.
Assessing the print, Wedbush analyst Daniel Ives liked the results. Emphasizing its focus on partnerships and offering more use cases whilst broadening its voice-enabled ecosystem to “accelerate growth and margins,” Ives thinks the company is “well-positioned to capitalize on the demand for AI chatbots.”
“Overall,” the analyst went on to say, “we believe this was a major step in the right direction for the SOUN story as the company continues to build toward profitable growth with stable revenue pillars in Automotive/Restaurant and strong monetization capabilities to capture demand from enterprises across industries that seek ways to optimize efficiencies.”
Accordingly, Ives rates SOUN as an Outperform (i.e., Buy), with a $9 price target. This suggests a potential upside of ~77% from the current levels. (To watch Ives’ track record, click here)
Ives is joined by 3 other analysts who also recommend buying SOUN. Alongside them, one analyst has given a Hold rating and another a Sell, all coalescing into a Moderate Buy consensus rating. The forecast calls for one-year returns of ~40%, considering the average target stands at $7.15. (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.
