SoundHound AI (NASDAQ:SOUND) The shares are posting big gains in Thursday’s trading. The company’s stock price was up 17.9% as of 12:30 p.m. ET.
SoundHound AI stock is rising at a time of strong momentum for meme stocks. The speculative growth scenario is seeing a strong recovery due to recent valuation volatility, and conversational artificial intelligence (AI) is also getting a boost from optimistic analyst reporting.
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SoundHound AI stock soars to a new high
Following the valuation declines that occurred in conjunction with news that the Federal Reserve expects only two rate cuts next year, speculative growth stocks are seeing strong recovery momentum. With today’s gains, SoundHound has hit a new high and is up more than 1,000% in 2024 trading – a rally that makes it one of the best-performing stocks of the year.
With speculative growth stocks seeing strong bullish momentum, investors appear to be bidding SoundHound with recent bullish analyst coverage in mind. On Monday, HC Wainwright published new coverage on the stock maintaining a buy rating and raising the company’s one-year price target from $8 per share to $26 per share. While the company’s analysts noted that the recent valuation gains have been driven by market excitement, they believe the company will perform well enough to support its growth-dependent valuation.
What comes next for SoundHound AI stock?
Today’s gains boosted SoundHound’s market cap to about $8.8 billion. The company is now trading at approximately 105 times this year’s expected revenue.
SOUN PS Ratio (forward) data by YCharts
SoundHound’s conversational AI services suggest highly scalable business opportunities, and it is likely that demand for this type of software will continue to grow rapidly in the long term. On the other hand, investors should keep in mind that the highly growth-dependent valuation of stocks opens the door to high volatility if growth falls short of expectations or if macroeconomic conditions take a turn for the worse.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
