SoundHound AI (SOUN 5.77%) stock is making big gains in Thursday's daily trading session. The audio technology company's share price was up 16.9% as of 10:15 a.m. ET, according to data from S&P Global Market Intelligence.
After some turbulent trading over the last week, SoundHound is roaring higher today thanks to bullish analyst coverage on the market's most closely watched artificial intelligence (AI) stock -- Nvidia. While SoundHound stock is still down roughly 21% from its 52-week high on the heels of a recent post-earnings pullback, its share price has rocketed 178% higher across 2024's trading.
Nvidia is boosting SoundHound AI stock again
In addition to producing the graphics processing units (GPUs) that make it possible to run advanced artificial intelligence applications, Nvidia is also the market's most influential AI stock. Bullish or bearish news for the GPU leader tends to have pronounced ripple effects for the valuations of other companies with substantial exposure to artificial intelligence trends.
Last month, it was also revealed that Nvidia held roughly $3.7 million in SoundHound AI stock at the end of last year's fourth quarter. Because of the investment position, SoundHound has recently tended to see particularly pronounced moves in conjunction with Nvidia-related news. On balance, this has been a highly bullish catalyst for the audio specialist -- and its stock is getting another boost thanks to this dynamic today.
In a note published today, Mizuho raised its one-year price target on Nvidia stock from $850 per share to $1,000 per share. The firm cited Nvidia's advantages in custom AI chip designs and emerging ethernet tailwinds as the reasons for raising its price target. As of this writing, the GPU leader's share price is up roughly 3.6% in today's trading, and the bullish momentum is also lifting SoundHound.
What comes next for SoundHound AI?
With a market cap of roughly $1.8 billion, SoundHound is still much smaller than Nvidia and potentially has the potential to deliver more explosive upside from current valuation levels. That's why the audio-tech specialist often sees even bigger share price gains following the arrival of bullish news for Nvidia.
As a result, it's possible that favorable developments for Nvidia could continue to push SoundHound stock higher in the near term. But it will ultimately be the audio software company's own sales and earnings results that determine long-term performance for its stock.
With SoundHound's order backlog roughly doubling to reach $661 million at the end of last year's fourth quarter, it looks like demand for the company's technologies is rapidly ramping up. On the other hand, it will take some time for these backlogged orders to turn into actual sales.
For the current fiscal year, SoundHound is guiding for sales to increase roughly 52.5% at the midpoint of its guidance range and reach approximately $70 million. That's a strong growth rate, but with the company valued at roughly 26 times this year's expected revenue, investors should understand the stock is a high-risk, high-reward play.
