Soundhound AI (NASDAQ: SOUN) is a popular AI stock due to its growth rate and size. Although it is a relatively small company with a market capitalization of $5 billion, its sales have increased by more than 50% from the previous year. Despite this, the company's stock price has sold off significantly over the past few weeks, dropping nearly 40% from its all-time high. This is a significant drop, and many investors may be wondering if now is the time to buy the stock.
The future is what matters for a company's stock price, and SoundHound AI is looking bright. Its stock price could go even higher by 2030, and if things go well for SoundHound AI, it would be a must-buy at this level.
Image source: Getty Images.
SoundHound AI integrates speech recognition technology and generative AI. This is not new technology, as digital assistants like Siri and Alexa have long used artificial intelligence to perform tasks similar to SoundHound AI's products. The difference is that SoundHound AI's platform is more accurate for certain tasks, such as drive-through ordering at a fast food restaurant.
This is just one application of SoundHound AI's software and is quite limited. However, if the technology were implemented in every drive-through of every fast-food restaurant in the United States, there would be a huge market opportunity. Other areas SoundHound AI is looking to tap into include financial services, healthcare, and insurance. These industries have large customer service teams to deal with issues and complaints. SoundHound AI Generation If AI-powered agents can be used to replace humans who typically fill these roles, SoundHound AI has the potential to capture a huge market opportunity.
There's just one problem. SoundHound AI is not human. If consumers overwhelmingly reject AI replacing humans in some of these daily interactions, SoundHound AI's software will have relatively limited use. What matters is whether consumers embrace AI integration, which may not happen for several years. Technology is often rejected when it is first deployed. While many consumers were initially hesitant to use credit cards online due to concerns that their information would be stolen, most now have no hesitation about making online purchases. The integration of voice AI may also seem strange at first, but it will eventually become normal and part of everyday life.
This is a bull case for SoundHound AI integration. In a bearish case, you may be rejected completely and your business may fail due to factors beyond your control. But when you look at SoundHound AI's growth rate, it's clear that the company is doing well.
SoundHound AI's revenue for the third quarter was $42 million, up 68% year over year. In the second quarter, management said it expects organic growth to be 50% for the “foreseeable future.” Q3 results support that statement, but if SoundHound AI can maintain its growth through 2030, what will the stock price be by 2030?
Over the past 12 months, SoundHound AI's revenue totaled $148 million. If SoundHound AI can maintain its growth rate through the end of 2030, its revenue will total $1.24 billion. We value SoundHound AI's stock at 20 times sales, as a software stock deserves a premium valuation if it can deliver that level of growth over five years. That would give SoundHound AI a market cap of about $25 billion, an increase of about 400%.
SOUN Revenue (TTM) Data by YCharts
The current price per share is about $12, so the stock price would be about $60 per share. This is a significant increase and would make it a must-buy stock. But remember that success is tied to consumer adoption. We can see this stock price materializing if consumers embrace AI integration. If they reject it, don't be surprised if SoundHound AI stock loses on the market.
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Keithen Drury has no position in any stocks mentioned. The Motley Fool recommends SoundHound AI. The Motley Fool has a disclosure policy.
The article Prediction: What SoundHound AI stock will cost by 2030 was published by The Motley Fool
