Is SoundHound Stock a Buy as Nvidia's GTC Kicks Off This Week?
As Nvidia's (NVDA) highly anticipated GPU Technology Conference (GTC) takes place this week, investor attention has turned to SoundHound AI (SOUN), a voice AI specialist that has experienced dramatic market volatility over the past year.
Despite plunging over 50% year-to-date following Nvidia's exit from its investment position, SoundHound remains up more than 15% over the trailing 12 months. SoundHound's participation at GTC 2025 is pivotal, showcasing its cutting-edge voice AI innovations for automotive applications and its strategic collaboration with Nvidia to integrate large language model capabilities into the NVIDIA DRIVE AGX platform.
With its next-generation in-vehicle voice assistant leveraging generative AI at the edge and the first-ever in-car voice commerce ecosystem, SoundHound is positioning itself at the intersection of AI, automotive technology, and consumer convenience.
With GTC 2025 ongoing, investors must consider whether SoundHound's technological advancements and industry partnerships can overcome the negative sentiment generated by Nvidia's divestment.
Is SoundHound AI Stock a Good Buy Right Now?
Valued at a market capitalization of $3.8 billion, SoundHound AI has a 20-year history of developing proprietary technology that enables natural conversational interactions between humans and machines. Over the years, it has evolved from a voice recognition startup to a comprehensive AI platform provider with three distinct revenue pillars driving its growth trajectory.
In Q4, SoundHound reported record quarterly revenue of $34.5 million, representing a 101% year-over-year increase, capping off a year of 85% growth. The company has dramatically reduced its customer concentration risk, with its largest customer now representing only 14% of revenue compared to nearly 50% in 2023.
SoundHound's business model encompasses three strategic pillars. The first focuses on voice-enabling products like automobiles and internet of things (IoT) devices through licensing and royalty agreements. SoundHound has secured relationships with 20 automotive brands and sees substantial growth potential as it currently represents only 3%-5% of its customers' production volume, with ambitions to reach 40%-45%.
Pillar two now comprises two-thirds of SoundHound's revenue and centers on subscription-based AI customer service solutions. The company has made significant inroads in the restaurant industry, with over 10,000 locations using its technology for drive-thru and phone ordering. Through its acquisition of Amelia, SoundHound has expanded into healthcare, financial services, government, and recently, the energy sector with a new seven-figure deal.
At CES 2025, SoundHound unveiled its third pillar, a voice commerce ecosystem that connects voice-enabled products with services. This approach allows users powered by SoundHound's technology to interact with businesses using its AI customer service, creating monetization opportunities for all stakeholders.
What's Next for the AI Stock?
SoundHound's technological differentiation stems from its proprietary 'speech-to-meaning' approach, which processes speech and derives meaning simultaneously rather than converting speech to text first. Its Polaris foundation model reportedly outperforms Google's (GOOG) (GOOGL) speech recognition by over 20% in accuracy while delivering four times better latency.
With $198 million in cash, no debt, and a path to positive adjusted EBITDA by the end of 2025, SoundHound has raised its 2025 revenue outlook to between $157 million and $177 million.
As conversations become the next frontier in human-computer interaction, SoundHound is well-positioned to capitalize on its first-mover advantage in what CEO Keyvan Mohajer describes as 'the killer app' of the generative AI revolution.
Analysts expect SoundHound AI to increase sales from $84.69 million in 2024 to $215 million in 2026. In this period, its losses per share are forecast to narrow from $1.04 to $0.20. Moreover, the company is forecast to end 2026 with free cash flow of $50 million, compared to an outflow of $55 million in 2025.
So, priced at 72x forward FCF, the AI stock is quite expensive. Of the six analysts covering SoundHound AI, three recommend 'Strong Buy,' and three recommend 'Hold.' The average target price for SOUN stock is $14.67, indicating an upside potential of over 52% from current levels.
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