Artificial intelligence (AI) stocks have soared in recent months, thanks to their potential to transform many industries. There could be many winners, including companies selling AI tools or using those tools to make their businesses more efficient. Investors who buy shares of these players could also stand to gain.
Even though many of these AI players have seen double- and triple-digit growth, some may still have plenty of room to run. We’re still early in the AI story, so an AI company that’s just developing its technology and signing up customers, for example, could see its shares rise as revenue begins to take off.
This may be the case for an AI stock that Wall Street views favorably. This particular player could soar 70% over the next 12 months, according to Wall Street’s average estimate. I’m talking about AI SoundHound (NASDAQ:SON), specialist in voice AI which has already increased by almost 100% this year. Is it time to buy or is Wall Street too optimistic?
SoundHound voice technology
SoundHound creates the technology that powers some of our everyday conversations, like ordering at a restaurant or interacting with our cars by voice. For example, Hyundai has integrated the company’s voice recognition system into some of its vehicles, giving drivers the ability to query their car about the weather, sports or even the progress of their favorite stock. And just recently, SoundHound announced it would go live in 100 White Castle drive-thru lanes by the end of the year.
Today, the voice AI specialist operates primarily in the foodservice and automotive sectors, but the market opportunities are vast and SoundHound aims to address areas such as the financial, healthcare and healthcare sectors. and retail in the years to come. All of this gives SoundHound a total addressable market of over $160 billion by 2026.
SoundHound isn’t the only creator of voice AI, but it has competitive advantages that could help it win in the long run. Its technology, protected by more than 100 patents, takes the word and translates it directly into meaning. This makes it faster and more accurate than traditional systems which involve translating speech into text before the meaning is determined. The company’s technology also supports complex conversations, another feature that makes it stand out.
This voice AI innovator generates revenue through the placement of its products and services, but also sees the opportunity for significant revenue growth by taking commissions when users of its products access various services – e.g. when a driver of a voice-activated car places an order at a voice-activated restaurant. That restaurant would pay a commission to SoundHound, and the company would share that commission with the automaker.
A solid order book
Today, SoundHound’s revenues are increasing and the order backlog is strong. In the most recent quarter, revenue and adjusted profit…
