Market Updates
As of 11:45 a.m. ET on Tuesday, SoundHound AI (NASDAQ: SOUN) stock is experiencing significant sell-offs, with its share price down by 8%. This decline comes amidst a broader market downturn, with the S&P 500 index down 0.5% and the Nasdaq Composite index down 1.2%.
Connection to CES Hype
The sharp drop in SoundHound AI stock is closely tied to investor expectations surrounding potential news from the Consumer Electronics Show (CES) trade show. The company’s investors were anticipating a mention of SoundHound AI by Nvidia CEO Jensen Huang during his keynote address at CES.
As an investor in SoundHound AI, Nvidia has a significant stake in the conversational AI specialist. In the past, seemingly unrelated news about Nvidia has been enough to cause substantial moves in SoundHound AI’s stock price.
Keynote Address Fails to Deliver
Unfortunately for SoundHound AI investors, Jensen Huang’s keynote address did not mention the company or its conversational AI capabilities. This lack of recognition may have disappointed investors who were expecting more groundbreaking news from CES.
However, SoundHound AI has unveiled its first in-vehicle voice commerce platform at CES, which allows users to order food directly through their vehicle’s infotainment system. The company is demoing this innovative technology at its CES booth and will be presenting throughout the show until January 10.
A High-Risk, High-Reward Play
With a market cap of approximately $6.8 billion, SoundHound AI stock is highly growth-dependent, with a valuation of around 41 times this year’s expected sales. This significant valuation places the company in a vulnerable position if positive catalysts fail to materialize or if the broader market turns bearish.
Despite today’s trading indicating volatility, the business has been adding customers and growing sales at an encouraging clip. SoundHound AI has also developed a highly scalable platform with a wide variety of use cases that have yet to be tapped.
Long-Term Prospects
Management raised its midpoint sales growth target for 2024 to 82%, indicating a strong momentum in the company’s business. Moreover, the company expects its sales growth to accelerate to more than double in 2025. These impressive growth prospects make SoundHound AI a high-risk, high-reward play.
Should You Invest?
Before investing $1,000 in SoundHound AI, consider this:
The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now, and SoundHound AI wasn’t one of them. The 10 stocks on the list could potentially produce significant returns in the coming years.
If you’re interested in learning more about these top picks, consider subscribing to Stock Advisor, which provides:
- An easy-to-follow blueprint for success
- Regular updates from analysts
- Two new stock picks each month
Since its inception in 2002, Stock Advisor has provided investors with a portfolio that has more than quadrupled the return of the S&P 500.
Take Action Now
Investors who are considering investing in SoundHound AI should weigh the company’s growth prospects against its high-risk valuation. With a scalable platform and impressive sales growth targets, SoundHound AI remains a compelling investment opportunity for those willing to take on risk.
By understanding the market dynamics at play and making informed decisions, investors can navigate the complexities of the stock market and make the most of their investments.
Stay Informed
To stay up-to-date with the latest news and analysis, follow The Motley Fool for expert insights and guidance on navigating the stock market.
