Voice recognition specialist SoundHound AI (NASDAQ:SOUN) has been riding the AI trend and grabbing headlines lately. First, there was a massive rally driven by news of Nvidia’s stake in the company (although more of a symbolic one). However, more recently, the shares have pulled back after a short report accused the company of misleading investors on various fronts, from its tech capabilities to its financial results.
So, is SOUN a scam or the real thing? After recently hosting management, Ladenburg Thalmann’s 5-star analyst, Glenn G. Mattson, thinks the latter is the case.
While the Nvidia investment brought attention to the company that had been burdened by the “stigma” of its De-SPAC public offering process, Mattson also thinks it brought to the fore internal improvements that were “going underappreciated.”
At the meeting, the company emphasized its objective of implementing voice-activated AI into real-world business scenarios. It contends that its voice technology surpasses existing solutions, particularly those from major tech companies in terms of natural language processing, thereby bringing additional value to customer-facing applications. It integrates these capabilities with both proprietary and third-party large language models (LLMs), alongside an arbitration engine to eliminate AI hallucinations, resulting in an AI-powered voice assistant suitable for diverse applications.
“The growing momentum in the Pillar II SaaS software for restaurants represents one very large use case whereby SOUN’s voice technology is able to harness the power of LLMs for specific business use cases to drive positive outcomes,” Mattson expounded.
SOUN’s primary target markets include IoT, particularly automotive applications, and service-oriented businesses, with a focus on quick-service restaurant (QSR) chains. Autos still represent the bulk of the business, amounting to 90% of the current revenue haul, but the QSR platform is expected to surpass 20% of revenue this year. For the next two years, Mattson is eyeing a 50% top line CAGR (compound annual growth rate). “This is based on strong backlog and public commentary around the demand profile management is seeing from its two main customer sets,” says Mattson. “We see lower losses in 2024, with EBITDA profitability in 2H:25.”
All told, Matson rates SOUN a Buy along with a $7 price target. That figure factors in additional growth of 20% from current levels. (To watch Mattson’s track record, click here)
3 other analysts join Mattson in the bull camp and with an additional 1 Hold and Sell, each, the stock claims a Moderate Buy consensus rating. The average target stands at $7.15 representing one-year upside of 23% from the current trading price. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
