Should Investing in SoundHound AI's Shares Be Considered?
2024 marked a significant leap for Artificial Intelligence (AI). Titans like Nvidia and Broadcom scaled new heights in the stock market, fueled by their involvement in the AI field.
The AI industry, though, isn't limited to these tech giants. It extends to developers of AI applications as well. To explore one such company, let's delve into SoundHound AI (-3.82%), a name investors should be aware of by 2025.
What's SoundHound AI all about?
In simple terms, SoundHound AI is a voice AI company, creating software that helps humans connect with AI models. This concept is not new. Remember when you asked an Amazon Alexa-enabled device a question, using your voice to trigger a response from AI?
What sets SoundHound apart, though, is its focus on voice AI. Unlike Alexa, Siri, or other major tech-backed devices, SoundHound is a relatively smaller company, dedicated solely to voice AI. Its AI tools aren't limited to branded hardware like an Amazon Echo or Apple iPhone. Instead, SoundHound collaborates with clients to incorporate voice-enabled AI features using their own equipment.
As a result, companies skeptical about sharing data or integrating big tech into their operations might find SoundHound more appealing. Moreover, SoundHound leads the pack, supporting 25 languages and understanding various accents within its library.
Global brands like Kia, Honda, and Krispy Kreme have embraced SoundHound's technology due to its speed, accuracy, and real-time human-like conversations.
How does SoundHound AI fare financially?
Proceeding to SoundHound's financials, it's crucial to acknowledge that the company is still in its growth phase. To thrive, SoundHound needs to boost revenue by acquiring new clients and expanding existing partnerships.
And it's doing just that. In its latest quarter (Sept. 30), total revenue skyrocketed to $25 million, marking an 89% increase from the previous year.
Moreover, SoundHound's client base has diversified, decreasing its dependency on individual clients. For instance, one year ago, its largest client accounted for 72% of its revenue. Today, the same client contributes only 12%. Similarly, automotive clients, which once made up 90% of SoundHound's customer base, now account for less than 25%.
In conclusion, SoundHound AI is expanding its client base, penetrating new industries such as healthcare, financial services, and insurance, while maintaining its presence in established sectors like restaurants and automobiles.
Is SoundHound AI stock a good investment now?
Clearly, SoundHound AI is not an investment for everyone. As a growing company, SoundHound has yet to see profits or generate positive free cash flow. This makes it unsuitable for value investors or those seeking steady income from their investments.
However, for growth-oriented investors, SoundHound is worth considering. Its impressive revenue growth and leading voice AI technology make it an intriguing choice for investors seeking shares in a high-growth AI business.
SoundHound AI's focus on voice AI and its collaboration with various industries to incorporate voice-enabled AI features can potentially provide opportunities for investors interested in the growing field of artificial intelligence. The company's revenues significantly increased by 89% in its latest quarter, which could indicate promising future growth.
In terms of finance, SoundHound is still in its growth phase, so to attract more clients and expand partnerships, it might be necessary to invest not just money but also time and resources to fully understand the company's potential and its potential returns in the financial market.
