SoundHound AI (NASDAQ: SOUN) recently experienced a significant pullback in its stock price following the release of its fourth-quarter earnings results. Despite this decline, one Wall Street analyst believes that this presents a buying opportunity for investors. Scott Buck, an analyst from investment bank H.C. Wainwright, reiterated a buy rating on the stock and raised his one-year price target from $5 per share to $7 per share. With the current trading price around $5.25 per share, hitting Buck’s target would represent a potential upside of 33%.
While Buck’s assessment of SoundHound’s Q4 results was not overly enthusiastic, he is optimistic about the company’s growth prospects. SoundHound reported revenue of $45.9 million in 2023 and projects revenue between $63 million and $77 million in 2024, indicating a growth rate of 53% if they hit the midpoint of the guidance range. Additionally, the company anticipates surpassing $100 million in sales by 2025, with a projected sales growth of over 43% in the following year.
Despite the recent dip in its valuation, SoundHound AI is still valued at approximately 22 times this year’s expected sales. The company disclosed a service and order backlog of $661 million at the end of last year. Although the stock is down by about 33% from its 52-week high, it is considered a highly speculative investment.
For investors willing to take on high risk and pursue opportunities in the AI sector, a dollar-cost averaging approach to SoundHound stock might be worth considering. However, given the speculative nature of the company’s valuation and performance outlook, those who are more risk-averse may want to explore other artificial intelligence investment options.
Before committing to an investment in SoundHound AI, investors are advised to evaluate all factors carefully. The Motley Fool Stock Advisor analysts have identified 10 stocks they believe hold significant potential for substantial returns in the future, although SoundHound AI did not make the list. The Stock Advisor service offers valuable insights, portfolio-building guidance, and two new stock recommendations every month, outperforming the S&P 500 return since 2002.
In conclusion, while SoundHound AI may present an opportunity for certain investors, it is essential to consider the risks involved and conduct thorough research before making any investment decisions.
