Sound and voice add an additional layer to artificial intelligence (AI) that often seems to fly under the radar. However, make no mistake about it, voice AI technology presents a massive opportunity and is crucial to delivering AI to real-world, consumer-facing applications.
SoundHound AI (SOUN 1.18%) is among the leaders in this field, and its stock price has risen over 205% over the past three years, even as it still trades nearly 60% below its all-time high today. While the stock carries some risks, it's an AI powerhouse that could be just getting started.
Here's why the stock could be a huge long-term winner, and why investors should consider buying and holding the shares today.
Image source: Getty Images.
Two reasons why SoundHound AI stands out in this competitive space
There's a bit more nuance to voice AI technology than a text prompt. It has an additional layer, where a model must hear sound, then translate it into machine language with the proper meaning and context, before analyzing it.
SoundHound AI was around long before the AI boom kicked off a few years ago. The company began in the automotive industry, where vehicle brands have used its voice AI for applications such as hands-free voice commands. Now, with the use cases rapidly expanding to include customer service agents, voice-based ordering, and others, the total addressable market is estimated to be $140 billion.
However, the space is highly competitive. There are several other voice AI companies, including multiple "Magnificent Seven" companies, who have voice AI baked into their broader offerings.
SoundHound AI may not be the largest player in the field, but it benefits from two distinct advantages.
First, the company specializes in voice AI. Often, a company that eats, sleeps, and breathes a single thing is better than a massive company that does hundreds of different things. Focus can be a powerful tool. Apple's years-long struggles with its voice assistant, Siri, illustrate that size doesn't always translate to success.
Second, SoundHound AI takes a neutral approach with its customers. It will white-label its technology, rather than force its logo on consumer-facing aspects of its customers' products and services. Its stance can make SoundHound AI a preferable partner for many brands, much like how The Trade Desk's independent platform appeals to brands in the digital advertising space.
NASDAQ: SOUN
Key Data Points
Growth is red-hot, and the momentum could continue
One of the hurdles for a promising company like SoundHound AI is expanding beyond that initial, successful market niche. Fortunately, the company is expanding beyond the automotive industry and gaining traction in new market segments. It acquired voice AI company Amelia last summer to expand its footprint and now works with some of the leading restaurants, hotels, gyms, and other consumer-facing businesses.
Acquisitions always help juice growth, hence the big jump from $85 million in 2024 revenue to an estimated $159 million this year. Still, estimates for next year indicate roughly 27% revenue growth:
Data by YCharts.
SoundHound AI is clearly growing, and the broader demand for AI could continue to provide the necessary tailwinds to sustain that growth, as long as the company continues to win business.
The stock's valuation is reasonable enough for the stock to shine over the long term
SoundHound AI's valuation is steep enough to make one pause. The stock trades at almost 25 times 2025 revenue estimates. That valuation isn't so high that it dooms the stock to underperform for years on end, but it does leave the company with a tighter margin for error. Growth must continue, and management must operate the business cleanly.
But if the company delivers on its revenue estimates and sustains similar growth beyond next year, the stock can grow into and beyond its current price tag.
SoundHound AI must continue to differentiate itself from larger competitors. That's not a given, which makes the stock a bit risky. Still, that's par for the course with most up-and-coming companies. If things go well, SoundHound AI's impressive voice AI technology and promising growth potential could yield lucrative rewards for investors over the coming years and beyond.
