We recently published a list of 10 Hot Software Stocks with High Upside Potential. In this article, we are going to take a look at where SoundHound AI, Inc. (NASDAQ:SOUN) stands against other hot software stocks with high upside potential.
As per MarkNtel Advisors, which is a leading consulting, data analytics, and market research firm, the US software market is expected to grow at a CAGR of ~7.17% over 2024 – 2030. Possessing a strong legacy of innovation and entrepreneurship, the US has been categorized as a world leader in software development, housing a thriving environment of startups, software corporations, and academic institutions. With businesses using technology to fuel creativity, productivity, and competitiveness, the broader US software market continues to move towards digital transformation throughout all industries.
In a bid to be more flexible, responsive to market demands, and scalable, it’s important to modernize legacy systems, procedures, and infrastructure apart from implementing cutting-edge technologies, says MarkNtel Advisors.
Emerging Trends in Software Industry in 2025
With software development evolving at a significant pace (thanks to technological innovation and dynamic business demands), businesses are required to stay ahead in a bid to remain competitive and deliver ground-breaking software solutions, says Datafortune. The rise of AI-powered development and low-code/no-code platforms, integration of DevSecOps practices, and sustainable software engineering are some of the key trends likely to shape software development in 2025.
AI-powered coding assistants, automation of tools, and intelligent debugging tools continue to transform the working infrastructure of developers. Datafortune believes that businesses are increasingly leveraging AI to automate workflows, accelerate software development, and enhance code quality.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Low-Code/No-Code Platforms and Sustainable Software Engineering
As per Datafortune, the demand for rapid application development continues to drive the adoption of low-code and no-code platforms. Such platforms allow business users and developers to develop applications with minimal or no coding, which makes software development more accessible. The firm believes that, by 2025, most of the enterprise applications are expected to be created using these platforms, which will reduce the requirement for traditional software development cycles and allow firms to innovate rapidly.
Sustainability continues to become a trend in software development. With companies actively optimizing their apps, green coding, optimal algorithms, and cloud optimization are being adopted as best practices, says Datafortune. Notably, the companies are also prioritizing sustainability in their software development services through the removal of redundant code and minimizing energy consumption in the data centers.
Overall, the broader software industry in 2025 will be characterized by innovations in AI, sustainability, security, and advanced and ground-breaking technologies like quantum computing.
Our Methodology
To list the 10 Hot Software Stocks with High Upside Potential, we used a screener to find software stocks. We chose the stocks which have increased significantly over the past 6 months, and that analysts still see upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 14. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A software engineer focused on a computer screen, writing code to create a conversational assistant.
SoundHound AI, Inc. (NASDAQ:SOUN)
% Gain Over Past 6 Months: ~121.5%
Average Upside Potential: ~118.8%
Number of Hedge Fund Holders: 11
SoundHound AI, Inc. (NASDAQ:SOUN) develops independent voice AI solutions, enabling businesses across automotive, TV, IoT, and customer service industries to deliver high-quality conversational experiences. The company opines that its in-vehicle voice commerce platform can resonate well with automakers. SoundHound AI, Inc. (NASDAQ:SOUN) introduced a new platform at the CES 2025 tech trade show. The company exhibited its on-the-go food ordering service to the customers.
SoundHound AI, Inc. (NASDAQ:SOUN)’s technology is being widely adopted by the broader automotive sector, with big brands including Hyundai integrating its vocal features into the vehicles. There has been rapid adoption by restaurants, powering ordering systems in more than 10,000 locations. SoundHound AI, Inc. (NASDAQ:SOUN)’s increased scale, together with strong market enthusiasm for conversational AI, is expected to aid its long-term growth prospects.
SoundHound AI, Inc. (NASDAQ:SOUN) has significantly increased industry diversification with well-balanced contributions throughout automotive, restaurants, financial services, healthcare, and insurance sectors, each accounting for 5%-25% of revenue in Q3 2024 as compared to more than 90% of automotive only in the prior year. SoundHound AI, Inc. (NASDAQ:SOUN) projects its FY 2024 revenue of between $82 million – $85 million and its FY 2025 revenue to be $155 million – $175 million.
Overall, SOUN ranks 1st on our list of hot software stocks with high upside potential. While we acknowledge the potential of SOUN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
