Artificial intelligence (AI) has given technology stocks a big boost this year, which is evident from the 49% surge in the Nasdaq-100 Technology Sector index. Yet, the growing adoption of this technology has failed to spark a rally in shares of SoundHound AI (SOUN 18.15%) despite the huge end-market opportunity that the company is sitting on.

SoundHound AI stock has dropped a whopping 55% since hitting a 52-week high at the end of June this year.

SOUN Chart

SOUN data by YCharts.

Wall Street, however, remains optimistic about the company's prospects. SoundHound AI has a median 12-month price target of $5, according to the five analysts covering the stock. That points toward a 135% jump in the company's stock price in the next year. It is worth noting that the Street-low price target of $3.60 suggests that SoundHound AI could jump 69% from current levels.

So, why are analysts so upbeat about this beaten-down stock? Can it deliver the tremendous upside that Wall Street is forecasting? And should investors buy the stock today? Let's find out.

AI is already driving solid growth

SoundHound AI's Houndify AI platform can be used by businesses to develop conversational voice assistants to help them improve their interaction with customers. Houndify offers multiple tools such as automatic speech recognition, text-to-speech conversion, wake words, and natural language understanding, using which they can build and deploy voice AI assistants.

The good part is that the demand for SoundHound AI's offerings is robust. This is evident from the company's third-quarter results, which were released on Nov. 9. SoundHound's revenue increased 19% year over year to $13.3 million, while the sequential jump was even stronger at 52%. Analysts would have settled for a 14% year-over-year jump in the company's revenue, but the growing uptake of the company's AI solutions helped it deliver stronger growth.

The company's adjusted net loss was down to $0.09 per share from $0.15 per share, which was in line with consensus estimates. More importantly, SoundHound's guidance points toward a terrific acceleration in growth. The company expects its top line to land between $16 million and $20 million in the current quarter. At the midpoint of $18 million, SoundHound's revenue would increase an impressive 89% year over year, outpacing the 84% growth it clocked in the same period last year.

This would bring the company's annual revenue to $46.7 million, an increase of 50% over 2022 levels. This also means that SoundHound is likely to end 2023 with a stronger growth rate than last year when its revenue was up 47%. Even better, analysts anticipate a sharp uptick in the company's growth rate in 2024, expecting its top line to jump nearly 62% to $74 million.

It is not surprising to see why analysts are anticipating SoundHound's growth to accelerate further. After all, the company was sitting on a cumulative bookings backlog of $342 million at the end of the third quarter. This metric suggests that SoundHound has a solid revenue pipeline that should help ensure impressive growth for a long time to come.

More importantly, SoundHound is currently scratching the surface of a $160 billion total addressable market (TAM) for voice AI assistants spread across multiple markets, such as automotive, restaurants, retail, contact centers, and banks. So, SoundHound could be at the beginning of a massive growth curve that could send its shares soaring in the long run.

The stock is a no-brainer buy right now

We have already seen that Wall Street believes SoundHound AI stock to be undervalued as it is currently trading below the Street-low price target. A closer look at the company's valuation and the growth that it has been delivering will tell us just why that's the case.

SOUN Revenue (TTM) Chart

SOUN Revenue (TTM) data by YCharts.

As the chart above tells us, SoundHound's top-line growth has been quite robust. However, its sales multiple has headed significantly lower, indicating that the market may not be valuing the company correctly. SoundHound stock is currently trading at 12 times sales, which is lower than the 13 times sales it had at the end of 2022.

Given that SoundHound AI is set to grow at a faster pace this year, investors can consider taking advantage of the relatively cheaper valuation to buy this AI stock as its latest results could trigger a bull run and may even help it deliver the eye-popping upside analysts are anticipating from it over the next year.