Why SoundHound AI Stock Skyrocketed Again This Week

After rocketing more than 40% at its high this week, SoundHound AI (NASDAQ: SOUN) 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%.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

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.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $334,266!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,976!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $479,727!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 16, 2024

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.