This artificial intelligence (AI) stock exploded in 2024. Is it still time to buy?

Actions of SoundHound AI (SOUND) increased this year. The artificial intelligence (AI) expert, specializing in AI-powered voice commands, has achieved a 122% year-to-date gain.

Is there still room for further growth, or has SoundHound AI already peaked? Let’s find out.

Understanding the recent performance of SoundHound AI stocks

This is not even the tip of the graphical mountain of SoundHound AI actions. Share prices rose to $8.91 per share in March. At the current price of about $4.70 per share, the stock is down 54% below that summit.

I admit that the March rush was a speculative event. I’m sure you already know that AI hardware giant Nvidia (NVDA 1.69%) inspired that jump by revealing a small investment in the voice acting specialist. Nvidia only bought $3.7 million worth of SoundHound AI stock in 2023, but that disclosure still more than tripled stock prices when the acquisition was revealed in mid-February.

The purchase was notable because Nvidia doesn’t buy shares of other companies very often. In addition, SoundHound AI investors hoped it could be a harbinger of a larger stock-buying move later, or perhaps an outright buyout of the entire company.

None of these ideas came to fruition, and SoundHound AI stock cooled dramatically. However, Nvidia’s investment has put the company in the spotlight on Wall Street in a whole new way. In addition, SoundHound AI announced a development partnership with Nvidia a few weeks later. The companies have already presented a large voice-controlled language model (LLM) that can manage Nvidia Drive platform in-car systems without even connecting to the Internet.

Nvidia’s role in SoundHound AI’s skyrocketing stock moves

So there was some substance to the Nvidia-based speculation, but not quite the all-in investment that the most optimistic SoundHound AI investors were hoping for.

At the same time, the company is in a prime position to deliver explosive sales growth over the next few years. The client list continues to grow longer and richer, expanding from the automotive industry to restaurant chains and healthcare systems. Houndify’s voice interaction system can understand what you’re trying to say in a noisy environment, place your words in the appropriate context, and still run advanced real-time analysis. There are other speech-to-text systems out there, but SoundHound AI solutions stand head and shoulders above the rest thanks to decades of experience.

Don’t miss out on SoundHound AI’s huge backlog

Growing interest in SoundHound AI’s voice commands is generating massive backlogs and long-term contracts. This is not my idea, but a firm number that the company reports in every quarterly earnings call.

The rest was $723 million in the latest report, up from $339 million a year ago and $283 million the year before. The volume of orders is not only increasing, but accelerating. And the average contract length is “just under seven years,” up from 6.5 years in the summer of 2023. Those customers are signing up for longer contract commitments over time.

These guaranteed sales numbers are impressive for a small-cap company with just $55.5 million in trailing 12-month sales. SoundHound AI’s top line revenue should skyrocket as the company collects revenue in exchange for services provided over the next seven years. And don’t forget that the backlog also keeps growing.

Future ambitions and market expansion

As you can see, SoundHound AI has plenty of growth catalysts and I expect big things from this high octane growth stock. Meanwhile, the company is expanding its profit margins while pursuing new target markets. In the long term, SoundHound AI leadership wants to “delight” end users across billions of voice-controlled devices by doing better than actual humans at understanding what the user is asking.

The long-term vision is a work in progress, of course. It will take time to deliver these features, especially on a global scale. But the ambition is there, and I don’t think SoundHound AI will be a short-cap stock for much longer. The stock looks like a great buy in the fall of 2024 and I can’t wait to see it evolve over the next two decades.