Can SoundHound AI Stock Go Parabolic After This Event?

SoundHound AI (NASDAQ: SOUN) was having a terrible time on the stock market so far this year, but all that changed after the company released its fourth-quarter 2024 results on Feb. 27.

Shares of the company that's known for providing voice artificial intelligence (AI) solutions to enterprises surged more than 17% the day following its earnings release. The stock's terrific jump was driven by its better-than-expected numbers along with improved guidance for 2025.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Let's take a closer look at SoundHound's quarterly report and check if the company's catalysts are strong enough to support a parabolic jump in its stock price.

SoundHound's terrific backlog points toward a bright future

SoundHound's 2024 revenue increased by an impressive 85% to nearly $85 million, exceeding the higher end of its original guidance. The company's 2025 guidance turned out to be the icing on the cake as it is expecting its top line to nearly double at the midpoint of its $157 million to $177 million range. What's worth noting is that SoundHound's original 2025 revenue guidance was in a range of $155 million to $175 million.

The fast-growing demand for the company's conversational AI solutions across multiple sectors explains why the company is confident of accelerating its revenue growth this year. SoundHound AI reported a slew of customer wins across different segments in its latest press release. The company has already built a solid customer base in the automotive and restaurant industries, and it is now expanding into more areas such as healthcare, retail, telecom, energy, and even government agencies.

What's more, the company is looking to push the envelope by launching agentic AI tools in a bid to capitalize on the next hot trend in AI. Agentic AI is a technology that allows AI agents to act autonomously to solve problems, take actions, and make decisions with minimal human oversight. According to one estimate, the global agentic AI market could grow by almost 40x over the next decade, generating close to $200 billion in annual revenue by 2034.

This market could open a solid growth opportunity for SoundHound. The company can make its conversational AI voice assistants more capable with agentic AI tools. Not surprisingly, SoundHound AI is already working on deploying agentic AI functions on its platform. As CEO Keyvan Mohajer remarked on the latest earnings conference call: "We have seen exciting results in the agentic AI tools we've created and are building and testing agentic use cases in every major vertical. We will bring these to commercial deployment soon, and this will be a game changer for our customers and the industry."

So, it won't be surprising to see SoundHound's already solid revenue pipeline improving further. The company ended 2024 with $1.2 billion in cumulative subscriptions and bookings backlog, an increase of 75% from the prior year. SoundHound management points out that this metric is "based on contracts signed and gives a snapshot of the revenue we expect to realize over the coming several years."

SoundHound adds that this metric has the potential to increase further thanks to the new contracts that it is signing along with the "significant cross-sell and upsell opportunities we're seeing, having added new SKUs and use cases across verticals." So, the outstanding growth that SoundHound is forecasting for 2025 seems sustainable in the coming years as well.

Can the stock make a parabolic move?

A parabolic move refers to a rapid rise in the stock price in a short time, akin to the right side of a parabolic curve. SoundHound stock is no stranger to such moves, having witnessed a parabolic jump last year after it emerged that AI pioneer Nvidia had bought a small stake in the company. Of course, Nvidia's recent move to exit its SoundHound position led to a sharp decline in the latter's stock price last month. However, its latest quarterly report shows that investors now have confidence in SoundHound's prospects.

Even analysts are expecting a 30% jump in SoundHound's stock price over the next year, as its 12-month median price target of $13.50 indicates. What's interesting to note here is that analysts are expecting this AI stock to fly higher even though it is trading at an expensive 43 times sales. But then, we have already seen that SoundHound can justify its expensive valuation.

The company's subscriptions and bookings backlog is so strong that it easily exceeds its 2025 revenue forecast and analysts' revenue expectations for 2026.

SOUN Revenue Estimates for Current Fiscal Year data by YCharts

As a result, there is a good chance that SoundHound's results could continue to exceed expectations, which might help this stock make a parabolic move and head higher in the long run as well.

Should you invest $1,000 in SoundHound AI right now?

Before you buy stock in SoundHound AI, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $710,848!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 3, 2025

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.