After rocketing more than 40% at its high this week, SoundHound AI (SOUN -10.00%) stock gave back much of those gains. But shares were still higher by about 10.3% for the week, as of late Thursday, according to data provided by S&P Global Market Intelligence.
The week is capping off a massive run for shares of the maker of conversational artificial intelligence (AI) technology solutions over the last month. The stock has more than tripled in that time, bringing year-to-date returns to 780%.
The under-the-radar pure-play AI stock
The big catalyst that drove SoundHound shares higher this week was a very bullish report from a widely followed Wall Street tech analyst. Wedbush’s Dan Ives thinks investors should be buyers of SoundHound and raised his price target from $10 to $22 per share this week, according to reports.
“SoundHound represents an underappreciated pure-play AI company,” Ives wrote. “The company is likely to expand its total addressable market and growth trajectory in 2025.”
That comes as SoundHound has been increasing revenue guidance throughout 2024. After its first-quarter report in May, the company raised projections for full-year revenue to a midpoint of $71 million. Now management predicts 2024 revenue will be in the range of $82 million to $85 million. And the 2025 outlook is for sales to be in the range of $155 million to $175 million.
SoundHound’s transformative acquisition of enterprise AI software company Amelia closed in the third quarter. That’s helping the company expand into markets most notably for enterprise conversational AI in healthcare.
In his report, Ives said, “We believe that SoundHound is a long-term winner in the AI revolution as the innovative tech stack provides various use cases for chat AI integrations.” Wedbush believes new verticals including healthcare will continue to improve the ability to monetize its technology.
SoundHound is still not profitable, however, and the stock’s parabolic move now has it valued at a forward price-to-sales (P/S) ratio of about 83. That’s a very high level of risk investors need to consider.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.