Find out why SoundHound AI’s stock has struggled so far. Does it still have growth potential in the long run?
Audio analysis and voice control expert SoundHound AI (SOUN -1.17%) entered the public stock market in April 2022. The company has been around for nearly two decades, but it’s a fresh face on Wall Street.
If you invested $10,000 in SoundHound AI two years ago, shortly after the initial public offering, I’m afraid your investment is in the red so far:
Ouch. That $10,000 bet on artificial intelligence (AI) analytics, just a few months before the ChatGPT boom, is now worth just $7,482.
What happened to SoundHound AI?
SoundHound AI also entered the stock market in the early days of the 2022 inflation crisis. It was an unprofitable company with hardly any revenues to its name, and market makers weren’t looking for promising long-term growth plans at the time.
The stock recently surged as AI giant Nvidia (NVDA -1.99%) disclosed a small investment in the company. The $3.7 million cash infusion was seen as a vote of confidence in the smaller AI expert, and share prices more than tripled in a couple of weeks.
But the stock now trades more than 40% below the Nvidia-powered price spike.
Does SoundHound AI still have a future?
I see plenty of promise in SoundHound AI today.
Its unique take on AI-driven voice recognition is finding lots of new contracts across several large target markets. The main target industries are restaurants, car makers, consumer electronics producers, and call centers.
The company’s revenue stream is a tiny trickle so far — just $6.7 million in Q1 — but that will change over the next couple of years.
You see, SoundHound AI has built up a massive backlog of multi-year order bookings that will convert into revenues aver time. The backlog was worth $682 million in the first quarter of 2024, up from $336 million a year ago and $230 million in the first earnings report of 2022.
So hold on to the remaining $7,482 of your SoundHound AI investment — or start a new one. The company’s large backlog and new contracts indicate potential for future growth.
Anders Bylund has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
