10 Worst Small Cap AI Stocks To Buy According to Short Sellers

3. SoundHound AI Inc. (NASDAQ:SOUN)

Short % of Shares Outstanding As of August 30: 22.29%

Market Capitalization as of September 14: $1.74 billion

Number of Hedge Fund Holders: 15

SoundHound AI Inc. (NASDAQ:SOUN) is a leading voice AI company specializing in natural language understanding (NLU). Its technology enables voice-enabled interactions with devices and services and is used by major automakers and consumer electronics companies in over 20 markets.

The company acquired Allset in June, and then Amelia AI later in August for $80 million in Q2 2024. Allset is an ordering platform, and Amelia offers customizable conversational AI solutions. These acquisitions aim to create a comprehensive platform beyond human capabilities and build a voice commerce ecosystem.

SoundHound AI Inc.’s (NASDAQ:SOUN) revenue is projected to reach $150 million in 2025, with $45 million from Amelia. Just recently, its Amelia Patient Engagement solution was employed by MUSC Health to improve patient access. The AI agent, named Emily, is powered by Amelia’s technology and helps patients manage appointments and get answers to non-clinical questions.

As of Q2 2024, the company had $13.46 million in revenue, up 53.83% year-over-year. It has a strong history of 50% revenue growth per year since 2021. The subscriptions and bookings backlog doubled year-over-year to $723 million, and annual query volume exceeded 5 billion.

This became the first company to offer ChatGPT-like features in in-vehicle voice assistants in Japan and Latin America. By partnering with Perplexity, they’ve added advanced online language models to its SoundHound Chat AI, which will be available soon. As automakers are willing to pay more for this upgrade, management expects higher revenue per unit.

It has also launched new customization tools for automotive brands to enhance their in-vehicle voice assistants, including Brand ID and Onboarding & Education. Customization services will be available to automakers in a SaaS model.

Despite being in its growth phase, the company’s advanced AI technology is resonating with customers, making it a strong candidate in the AI market.