SoundHound AI (SOUN) is an overlooked and hidden gem that could ride the wave of 2024’s hottest investment trend: artificial intelligence (AI). The Santa Clara, California-based company is known for its conversational intelligence technology. The company’s late February earnings report cemented its position among the stock market’s rising AI starsÂ
On February 29th, SoundHound AI announced an 80% year-over-year increase in its fourth quarter revenue at $17.1 million. This marked the culmination of a standout year fueled by increasing demand for practical generative AI solutions. The company’s voice AI applications have found applications across various customer-facing sectors, enhancing customer engagement.Â
In addition to handily topping Wall Street’s adjusted earnings per share (EPS) forecast, SoundHound AI ended last year with strong momentum. The company’s cumulative subscriptions and bookings backlog reached $661 million, doubling the previous year’s figures. With its growth trajectory showing signs of growth throughout 2024, the company is catching the eye of investors.Â
On Thursday, SoundHound AI’s stock price soared to $10.25, the highest since May 2022. With a more than 250% increase this year and a spike in trading volume, the shares have dramatically rebounded after a period of stagnation throughout much of 2023.Â
Conversational AI LeaderÂ
SoundHound continues to establish itself as a frontrunner in the conversational AI sector. The company’s initial significant venture into the automotive sector can be seen as a move to take advantage of new demand for novel and distinctive technologies.Â
Last month, its ChatGPT voice assistant became the first product of its kind to go into full production with a global auto manufacturer. Stellantis, a Dutch automotive company, will incorporate SoundHound’s Iris assistant into its DS vehicles across 18 countries in 13 languages, starting this month. This innovative technology enables hands-free voice commands for accessing trip details, operating the sunroof, and checking live sports scores. Additionally, Peugeot, Opel, and Vauxhall are evaluating SoundHound’s Chat AI technology in Europe.Â
SoundHound is extending its reach into the restaurant industry as well. In December 2023, it unveiled plans to acquire SYNQ3 Restaurant Solutions, a move poised to position it as the U.S. leader in voice AI technology for restaurants. SoundHound AI’s software is now utilized in over 10,000 restaurant locations belonging to 25 national chains, aiming to enhance customer experience and operational efficiency.Â
Jersey Mike’s Subs recently adopted SoundHound’s voice technology, introducing an AI ordering system across 50 locations. This system not only processes orders but also provides information on promotions, parking, allergies, and operating hours. Alongside serving clients like Krispy Kreme, White Castle, and Church’s Chicken, the integration with SYNQ3 will extend SoundHound’s clientele to include renowned chains such as Chipotle, Applebee’s, and Papa John’sÂ
A Return To IPO Levels Ahead?Â
SOUN hit an all-time in May 2022 of $18.14 just four days after its IPO debut. The stock would need to double in value to recapture its highs and this represents a longer-term goal for investors. In the near-term, he good news is that it recently stormed past 250-day resistance ($7.42) in high volume which may be a bullish signal. Profit taking finally set in late this week, but roughly $10.00 still separates SOUN from its record peak. Â
One thing that could spark further gains is a short squeeze rally. Approximately 18% of the stock’s float is held short. If it continues to trend upward, short sellers may be pressured to cover their positions potentially accelerating SOUN’s gains.  Â
Regardless of where SoundHound AI shares go in the near-term, the company appears well-positioned to benefit from long-term AI growth. A leading position in restaurant AI technology and opportunities to expand into other verticals could make this small cap stock a big-time AI winner.Â