2024 has been the year of the artificial intelligence (AI) boom. Mega cap shares such as Nvidia And Broadcom have risen to incredible heights thanks to their exposure to the AI industry.
However, the emerging AI sector includes more than just the giant chipmakers; it also includes developers of AI applications. So let’s delve into such a company, SoundHound AI (NASDAQ:SOUND)to see why it’s a name investors need to know before 2025.
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What does SoundHound AI do?
In short, SoundHound AI is a voice AI company, meaning it develops software that helps people communicate with AI models. Most people are familiar with how this works. For example, if you’ve ever had a Amazon Alexa device a question, your voice was used to trigger a response from an AI model.
One thing that sets SoundHound apart, however, is that unlike Amazon’s Alexa, Apple‘s Siri, or other big tech sponsored devices, SoundHound is a relatively small company focused on just now voice AI. That is to say, SoundHound’s AI tools are not linked to specific brand hardware, such as an Amazon Echo or Apple iPhone. Instead, SoundHound works with customers to integrate voice-enabled AI features using their own equipment.
Accordingly, companies that are hesitant to share their data and introduce big technology into their operations (and in turn, their customers) may feel more comfortable with a company like SoundHound. Moreover, SoundHound is also a leader in this field. It supports 25 languages and can understand many accents within the language library.
Finally, the proof is in the pudding. Global brands such as Kia, Hondaand Krispy Kreme adopted SoundHound’s technology for its speed, accuracy and ability to deliver real-time, human-like conversations.
How are SoundHound AI’s finances?
As for the company’s financialsit is important to note that SoundHound is fully in the growth phase of its life cycle. At this point, SoundHound needs to increase its revenue by acquiring new customers and expanding its relationships with existing customers.
And the company is performing well in that area. Total revenue in the most recent quarter (ended September 30) grew to $25 million, an increase of 89% from a year earlier.
In addition, SoundHound’s customer base has expanded, reducing its dependence on any one customer.
For example, a year ago the company’s largest customer accounted for 72% of SoundHound’s revenue; Today, the largest customer delivers alone 12% of total turnover. Similarly, automotive customers represented 90% of SoundHound’s customer base a year ago and now represent less than 25%.
In summary, SoundHound AI is expanding its customer list as the company expands into new industries such as healthcare, financial services and insurance while mcontinuing the already existing partnerships in the restaurant and automotive sectors.
Is SoundHound AI stock a buy now?
It should go without saying that SoundHound AI is not a stock for every investor. The company has yet to make a profit and is not generating positive free cash flow. That puts the stock out of reach for value investors or those looking for passive income from their investments.
For growth-oriented investors, however, SoundHound is a stock worth considering. The rapid growth in salesare linked to advanced speech AI technology, make it an attractive choice for investors looking to buy into a hyper-growth stock within the AI sector.
Should you invest $1,000 in SoundHound AI now?
Consider the following before purchasing shares in SoundHound AI:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions at Amazon and Nvidia. The Motley Fool holds and recommends positions in Amazon, Apple, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
