SOUN - SoundHound AI: Don't Chase AI Hype Following Q1 Earnings

2024-05-10 13:22:56 ET

Summary

• SoundHound AI reported 73% sales growth in Q1, boosted by an acquisition.
• The company doesn't provide enough clarity on the restaurant voice AI ordering opportunity, and the large cumulative backlog doesn't amount to large annual revenues.
• SOUN stock valuation is too high at 17x 2025 sales targets, making it an unattractive investment.

SoundHound AI, Inc. ( SOUN ) is one of the more promising artificial intelligence ("AI") stocks, but the company doesn't aggressively push the voice AI opportunity and generally lacks scale to fend off competition. The stock constantly jumps to prices requiring far faster AI growth and market control to warrant an investment. My investment thesis remains Neutral on the stock following the post earnings rally back above $5....

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