2024 was the year of the artificial intelligence (AI) boom. Mega-cap actions like Nvidia and Broadcom have risen to incredible heights thanks to their exposure to the AI industry.
However, the emerging AI sector includes more than just the giant chipmakers; it also includes AI application developers. So, let’s dig into such a company, SoundHound AI (SOUND 15.38%)to see why it’s a name investors need to know before 2025.
Image source: Getty Images.
What does SoundHound AI do?
In a nutshell, SoundHound AI is an AI voice company, meaning develops software that helps humans communicate with AI models. Most people are familiar with how it works. For example, if you have ever asked for a Amazon Alexa enabled device a question, your voice has been used to trigger a response from an AI model.
However, one thing that sets SoundHound apart is that unlike Amazon’s Alexa, Apple‘s Siri, or other big tech sponsored devices, SoundHound is a relatively small focused company right AI voice. Is it, SoundHound’s AI tools they are not related to specific branded hardware, such as an Amazon Echo or Apple iPhone. Instead, SoundHound works with customers to integrate voice-enabled AI features using its proper equipment
As a result, companies that may be hesitant to share their data and introduce big tech to their operations (and, in turn, their customers) may be more comfortable with a company like SoundHound. In addition, SoundHound is also a leader in the space. Is it support 25 languages and can understand many accents in its language library.
Finally, the proof is in the pudding. Global brands such as Kia, Hondaand Krispy Kreme have adopted SoundHound’s technology because of its speed, accuracy and ability to deliver real-time human conversation.
How are SoundHound AI’s finances?
Turning to the financials of the companyIt is important to note that SoundHound is just in the growth stage of its life cycle. At this point, SoundHound needs to increase its revenue by landing new customers and expanding its relationships with existing customers.
And on this front, the company is doing well. Total revenue in its most recent quarter (ended September 30) rose to $25 million, up 89% from a year earlier.
Additionally, SoundHound’s customer base has expanded, thereby decreasing its reliance on any particular customer.
For example, a year ago, the company’s largest customer accounted for 72% of SoundHound’s revenue; today, their biggest customer just provides 12% of their total revenue. Similarly, automotive customers represented 90% of SoundHound’s customer base a year ago and now represent less than 25%.
To summarize, SoundHound AI is growing its client list as the company expands into new industries such as healthcare, financial services and insurance while mmaintaining its already established partnerships in the catering and automotive sectors.
Is SoundHound AI stock a buy now?
It goes without saying that SoundHound AI is not a stock for any investor. The company has yet to make a profit and does not generate positive free cash flow. That puts the stock off limits for value investors or those looking for passive income from their investments.
However, for growth-oriented investors, SoundHound is a stock worth considering. Its rapid growth in revenuecoupled with his State-of-the-art voice AI technology, makes it a compelling choice for investors looking for shares in a hypergrowth stock in the AI sector.