2023 might go down in the history books as the year that artificial intelligence (AI) really hit its stride. The massive gains delivered by Nvidia (NASDAQ: NVDA) so far this year -- up more than 190% -- underscore how big the AI boom has been.

Nvidia won't be able to continue its meteoric rise indefinitely. But investors have other options even if they missed out on Nvidia's surge. Wall Street thinks another AI stock could skyrocket by 58%.

The sound of success

Like many AI stocks, SoundHound AI (SOUN 3.50%) has already had a great year -- at the time of writing, its shares have soared close to 70% year to date. The stock once flew somewhat under the radar, but the intense interest in AI over the last few months brought SoundHound more into the spotlight.

The company has built a conversational voice AI platform used in customer service applications. Instead of converting speech to text and then text to meaning, as most rivals do, SoundHound uses a one-step process that converts speech directly to meaning.

SoundHound was founded in 2005 by recent graduates from Stanford University. It is still managed by that founding team, including CEO Keyvan Mohajer, Vice President of Products James Hom, and Vice President of Engineering Majid Emami.

The company's customers include automotive giants Honda, Hyundai, Kia, and Mercedes-Benz. Several leading technology companies also use SoundHound's platform, including Netflix, Oracle, and Snap.

Why Wall Street is so bullish

Only three analysts surveyed by Refinitiv cover SoundHound. But all of them like the stock, with two rating it a buy and one rating it a strong buy.

Why is Wall Street so bullish about SoundHound? It isn't just because of the current AI fervor. The company is growing fast, with revenue soaring 56% year over year in the first quarter of 2023.

More importantly, SoundHound has strong growth opportunities ahead.

  • Pindrop Security conducted a study that found 94% of large companies expect to use voice AI over the next couple of years. That's not surprising considering that the technology helps lower staffing costs and could increase customer retention.
  • The expansion of Internet of Things (IoT) devices also gives SoundHound a big potential market. Juniper Research projects that, driven in part by IoT, the market for voice AI will top $160 billion by 2026.

Risks to consider

As exciting as SoundHound's prospects seem, the stock faces several risks. For one thing, the company remains unprofitable. It could have to take on additional debt or conduct a dilutive share offering to raise cash in the future.

SoundHound is heavily dependent on a handful of large customers. Last year, three customers accounted for two-thirds of the company's total revenue. A loss of any of these customers would hurt badly.

There's also growing competition in the voice AI market. Rapid technological changes could potentially leave SoundHound behind.

Finally, a lot of SoundHound's growth prospects are already baked into its share price. The stock currently trades at nearly 18 times trailing-12-month sales. The company can't afford a misstep with such a premium valuation. But even at that lofty level, SoundHound is still cheaper than Nvidia.

I'm not certain that SoundHound will actually shoot up 58% over the next 12 months. But Wall Street's expectations that the stock could move higher seem reasonable to me.