Is Trending Stock SoundHound AI, Inc. (SOUN) a Buy Now? (2024)

SoundHound AI, Inc. (SOUN - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Shares of this company have returned +16.2% over the past month versus the Zacks S&P 500 composite's +4.3% change. The Zacks Computers - IT Services industry, to which SoundHound AI belongs, has gained 4.3% over this period. Now the key question is: Where could the stock be headed in the near term?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate Revisions

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

SoundHound AI is expected to post a loss of $0.09 per share for the current quarter, representing a year-over-year change of +10%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

For the current fiscal year, the consensus earnings estimate of -$0.33 points to a change of +13.2% from the prior year. Over the last 30 days, this estimate has remained unchanged.

For the next fiscal year, the consensus earnings estimate of -$0.22 indicates a change of +33.3% from what SoundHound AI is expected to report a year ago. Over the past month, the estimate has changed -4.4%.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for SoundHound AI.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Is Trending Stock SoundHound AI, Inc. (SOUN) a Buy Now? (1)

Revenue Growth Forecast

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

For SoundHound AI, the consensus sales estimate for the current quarter of $13.01 million indicates a year-over-year change of +48.7%. For the current and next fiscal years, $71.01 million and $103.91 million estimates indicate +54.8% and +46.3% changes, respectively.

Last Reported Results and Surprise History

SoundHound AI reported revenues of $11.59 million in the last reported quarter, representing a year-over-year change of +72.7%. EPS of -$0.07 for the same period compares with -$0.12 a year ago.

Compared to the Zacks Consensus Estimate of $10.12 million, the reported revenues represent a surprise of +14.53%. The EPS surprise was +22.22%.

Over the last four quarters, SoundHound AI surpassed consensus EPS estimates two times. The company topped consensus revenue estimates three times over this period.

Valuation

Without considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

SoundHound AI is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Conclusion

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about SoundHound AI. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Is Trending Stock SoundHound AI, Inc. (SOUN) a Buy Now? (2024)

FAQs

Is Trending Stock SoundHound AI, Inc. (SOUN) a Buy Now? ›

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for SoundHound AI.

Is SOUN a good stock to buy? ›

Soundhound AI (SOUN) stock has many strengths, including its ability to benefit from the AI boom and its partnership with Nvidia (NVDA). But investors are overly exuberant about the company's recent announcement while the company's valuation is very high. I give Soundhound AI stock a “hold” rating.

What is the future of SOUN stock? ›

SOUN Stock 12 Month Forecast

Based on 5 Wall Street analysts offering 12 month price targets for SoundHound AI, Inc Class A in the last 3 months. The average price target is $7.50 with a high forecast of $9.50 and a low forecast of $5.00. The average price target represents a 39.66% change from the last price of $5.37.

What is the SOUN stock price forecast for 2025? ›

According to analysts, SOUN price target is 7.75 USD with a max estimate of 9.50 USD and a min estimate of 5.00 USD.

What is the stock forecast for SOUN in 2024? ›

According to our current SOUN stock forecast, the value of SoundHound AI, Inc. shares will rise by 17.77% and reach $ 6.32 per share by July 17, 2024.

Will SoundHound be profitable? ›

By 2025, analysts expect SoundHound to generate $102 million in revenue with a positive adjusted EBITDA of $2 million. That's a promising outlook, but its stock still looks expensive, at 27 times its 2024 sales and 19 times its 2025 sales.

What is the best AI company to invest in? ›

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4 more rows
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What will SOUN stock be worth in 5 years? ›

SoundHound AI Inc - Ordinary Shares - Class A quote is equal to 5.365 USD at 2024-07-12. Based on our forecasts, a long-term increase is expected, the "SOUN" stock price prognosis for 2029-07-06 is 11.630 USD. With a 5-year investment, the revenue is expected to be around +116.78%.

Who owns SOUN stock? ›

Largest shareholders include Vanguard Group Inc, BlackRock Inc., VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, State Street Corp, Geode Capital Management, Llc, VITAX - Vanguard Information Technology Index Fund Admiral Shares, Susquehanna International Group, Llp, IWM - iShares Russell 2000 ETF, ...

What is the dividend for SOUN? ›

SOUN does not currently pay a dividend.

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What does SoundHound AI do? ›

SoundHound's independent voice AI platform connects people to brands through customized conversational experiences that voice-enable products, services, and apps while giving companies access to their valuable data and analytics for greater control and brand ownership of the customer experience.

What is the price prediction for AI stock? ›

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What is the price prediction for SoundHound AI stock? ›

What are analysts forecasts for SoundHound AI stock? The 18 analysts offering price forecasts for SoundHound AI have a median target of 5.51, with a high estimate of 9.50 and a low estimate of 2.20. The median estimate represents a 114.86 difference from the last price of 6.33.

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