We recently published a list of 11 Trending AI Stocks On Latest News and Analyst Ratings. Since SoundHound AI Inc (NASDAQ:SOUN) ranks 11th on the list, it deserves a deeper look.
Investors remain cautious following a major global selloff that shook the markets last week on recession fears. Analyst warnings around sky-high CapEx of tech companies and lack of visibility over returns are also expected to keep tech valuations in check in the coming weeks.
Last month, Roger McNamee of Elevation Partners, while talking to CNBC, highlighted a report from Goldman Sachs that said returns of AI investments might fail to meet investors’ expectations.
“The amount of capital investment in this sector, which is billions of dollars now, is so large that it’s almost unimaginable that we are going to get a rate of return over the next few years that justifies the amount of investment,” McNamee said.
Talking to Bloomberg, JPMorgan Asset Management’s Aisa Ogoshi said that there is some “adjustment” coming for tech stocks as she expects the AI-centric rally to diversify to other sectors.
“The key is to keep an eye on the earnings trends. It’s easy to panic in these times but really, just sit down and look at the numbers and reassess our positioning.”
Asked whether she plans to reduce exposure to AI stocks in the coming days, the analyst said she’d be more “selective” when it comes to AI plays and will increase the quality of stocks in the portfolio.
For this article, we chose 11 trending AI stocks based on the latest news, earnings and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
SoundHound AI Inc (NASDAQ:SOUN)
Number of Hedge Fund Investors: 15
SoundHound AI Inc (NASDAQ:SOUN) recently announced it will buy AI startup Amelia AI for $80 million. Amelia makes an AI agent that businesses that customize according to their needs. The company’s customers include BNP Paribas, the pharma company Teva and Fujitsu. With 2024 revenue projected at $80M, SoundHound AI Inc (NASDAQ:SOUN) now expects 2025 revenue to surpass $150M, with Amelia contributing $45M in recurring AI software revenue and related fees.
SoundHound AI Inc (NASDAQ:SOUN) is expanding its solutions arsenal to increase its business footprint. In June the company bought Allset, an ordering platform for restaurants. Last year, it bought SYNQ3, which provides conversational AI-ordering solutions for restaurants, for $25 million.
Cantor Fitzgerald upgraded SoundHound AI to Overweight from Neutral on the Amelia deal news. Analyst Brett Knoblauch called the deal potentially transformative and increased his price target for SoundHound to $7 from $5.
SoundHound AI Inc (NASDAQ:SOUN) AI has strong secular growth catalysts because businesses all over the world are deploying voice AI solutions to cut costs and improve efficiency. During an earnings call in May SoundHound AI Inc (NASDAQ:SOUN) talked about the potential of its AI solutions business potential for customer service:
Last year, we expanded our AI customer service offering beyond restaurants with Smart Answering, a product that handles multiple calls at once 24/7, conveniently filtering out spam calls, providing verbal and SMS responses, taking configurable actions, capturing leads with intelligent messaging and answering questions about policies, hours, products, services, pricing and more. Smart Answering is showing rapid growth within pillar two and already has hundreds of locations signed up from single-location small businesses to brands such as Planet Fitness. We estimate our pillar two (AI customer solutions service business) total addressable market to be over $100 billion with over 1 million restaurants and approximately 30 million businesses in North America alone that we can offer our solutions to. And with dozens of languages we already provide to our pillar one customers, we plan to also go international in pillartwo. We believe with large language models and generative AI and most importantly,the data science and machine learning behind our proprietary software, the time is now.
Overall, SoundHound AI Inc (NASDAQ:SOUN) ranks 11th on Insider Monkey’s list titled 11 Trending AI Stocks On Latest News and Analyst Ratings. While we acknowledge the potential of SoundHound AI Inc (NASDAQ:SOUN), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SOUN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
