Got $20? Here's 1 No-Brainer Artificial Intelligence (AI) Stock Worth Buying for 2025

SoundHound AI (NASDAQ: SOUN) is likely one of the cheapest artificial intelligence (AI) stocks available (at least on a dollar-per-share basis). While most brokerages offer fractional shares, not all do, and that can limit what stocks investors can buy.

At around $20, SoundHound is a fairly affordable investment for most people, but the stock is far from cheap. How can a stock be affordable and expensive at the same time? It's all about valuation.

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SoundHound's stock has been on fire lately

SoundHound AI is one of the few pure-play AI investments available, which is why it has become a popular pick for investors. The business premise is using an audio prompt to interface with an AI model. While this may sound easy, just consider how often other primitive AI assistants like Siri or Alexa make errors. What SoundHound offers is far ahead of these two, and it found commercial applications in restaurants, banks, and as a digital assistant in vehicles.

The applications for using audio input for an AI model are practically endless, which is why investors are so excited about SoundHound's potential. However, this has caused the stock's valuation to swell.

While the stock trades for around $20, you're not getting a huge share of the company for your $20 investment. The stock has exploded over the past month, rising over 270% since the start of November. The excitement started following its Q3 earnings release (which was released on Nov. 12). For some investors, the results were so promising that they are now willing to pay roughly four times as much for the same company as they were just a month and a half ago.

With the price skyrocketing on the same piece of information, SoundHound's valuation rose.

SOUN PS Ratio data by YCharts

The stock trades for an unbelievable 95 times sales. It's hard to describe how expensive that is, but I'll give you a few comparisons:

• 46% more expensive than Palantir
• 239% more expensive than Nvidia
• 869% more expensive than Apple
• 2,400% more expensive than Amazon

In other terms, for every $1 in sales over the past 12 months that these other companies had, you'd have to pay that much more for SoundHound's. So, for every $1 in SoundHound sales that your stock has claim to, the same investment in Amazon would claim $25 in sales.

This is just one picture of how expensive the stock is. But, sometimes, overpaying for something in the short run can make sense if you're a long-term investor. So, is this price tag worth paying?

The price you pay today may be worth it

SoundHound's Q3 results were excellent, with revenue rising 89% year over year to $25.1 million. However, what excited investors was SoundHound's 2025 revenue guidance, which management expects to come in between $155 million and $175 million next year. Compared to 2024's $82 million to $85 million revenue range, this represents revenue doubling in 2025.

However, with the stock worth nearly 100 times sales, SoundHound will need to double its sales in 2026 as well for the stock to be worth the price you're paying today.

If SoundHound does that and then plans to do it again in 2027, then the unbelievably expensive stock looks pretty cheap at its current price tag. But if it falls on its face, the stock will be rapidly sold off.

However, all signs point to SoundHound potentially having that growth on the books, as bookings over the next six years have exceeded $1 billion in revenue. If SoundHound's product gains momentum, this figure could go even higher.

So, is SoundHound still a buy despite its rapid rise and unbelievable price tag? Perhaps. This is a high-risk, high-reward investment, and it could flop as easily as it could keep rising.

As a result, if you want to own a piece of SoundHound, I'd recommend a small position size; that way, if it drops, your overall portfolio won't be harmed by it. But if it rises, you'll still get a strong gain out of it.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.