Is SoundHound a million dollar stock?

Artificial intelligence (AI) is still in its infancy, but it has the chance to become a game-changing technology in much the same way as the Internet and smartphones. These technologies have produced a number of winning companies and helped create many millionaires along the way.

Let’s look at a company that has the potential to be a millionaire producer in the future: SoundHound AI (SOUND).

A leader in voice AI

SoundHound has developed a voice AI platform called Houndify that helps voice assistants interact with people in a more natural and conversational way. It does this by combining speech to meaning technology and deep meaning understanding technology. The former allows AI voice assistants to process speech in real-time even before someone finishes speaking, while the latter helps recognize user intent.

The company made strong early inroads into the automotive space, where its platform was engineered into a number of vehicle models from various manufacturers. Currently, the company has relationships with numerous automobile brands, including Hyundai, Kia, Hondaand Stellaramong others. Peugeot, Vauxhall, Opel, Citroën and Alfa Romeo, which are Stellantis brands, recently went into full production with SoundHound technology, bringing the total to six Stellantis brands. In its latest earnings release, it also said a US electric vehicle maker is about to go into production with its SoundHound Chat AI voice assistant.

While the company is making inroads into this market, its penetration remains quite low. SoundHound said its current customers produce about 25 million vehicles a year, but that its platform is only in about 3 percent to 5 percent of them. It sees an opportunity to double its customer base in the automotive space while increasing penetration to 40% to 45%.

If they hit that goal, the technology would go from about 1 million vehicles in 2024 to 19 million in 2028. Given that SoundHound receives royalties for every vehicle its platform is in, this would lead to exponential growth.

The other big vertical that SoundHound has entered is the restaurant space. The company has a number of industrial solutions, including for drive-thrus, phone orders and employee assistants. Consider this a billion dollar revenue opportunity in the US by 2028.

The company has signed contracts with a number of top restaurants, including ChipotleWhite Castle, Five Guys, Noodle & Companyand Jersey Mike’s, among others. It also has contracts with restaurant-focused fintech companies such as toast, block, and Olo.

Image source: Getty Images

What Amelia’s acquisition could mean

While the company has built momentum in the automotive and restaurant verticals, its recent acquisition of Amelia will help push its services into other industry verticals. Amelia’s conversational and generative AI platform is used by organizations to help with tasks such as customer service, employee onboarding and back-office work. Its platform is used in a variety of different industries, including healthcare, financial institutions, insurance and retail.

At the time of the deal, SoundHound said the combined companies would have more than $150 million in revenue next year, with Amelia contributing more than $45 million of that total. It would have $160 million in cash and $39 million in debt on its balance sheet following the $80 million acquisition.

Technology consulting firm QKS Group, which helps companies select and adopt technology, believes the acquisition of Amelia, along with its previous acquisitions of SYNQ3 and Allset, will help SoundHound create an entire commercial voice ecosystem that can handle more sophisticated interactions in a variety of industries. This includes things like making doctor appointments or financial transactions via voice control, or even answering complex questions without the need for a human. She believes the company may need more technology acquisitions to fill some gaps, but that it is moving in that direction.

Is the stock a buy?

SoundHound is still more visionary than results-oriented at this point. It’s growing nicely from a small base and getting some great earnings, but its potential is still largely tied to what the company could become, not what it currently is.

Based on analysts’ 2025 estimates, the stock isn’t cheap per se. However, given its recent revenue growth of over 50%, the stock isn’t overpriced either.

SOUN PS Ratio (1 year ago) data by YCharts

At the end of the day, SoundHound is a speculative investment because the company is still in its early growth phase and not profitable. However, if it can create an unmatched commercial voice ecosystem, it could very well become a million dollar investment in the future. That said, investors should expect the stock to have a lot of volatility, meaning it’s best suited for risk-tolerant investors.