SoundHound's Business Is Booming. Can the $7 Stock Double by September 2027?

SoundHound AI (NASDAQ: SOUN) was once a darling of the artificial intelligence trend, and its stock skyrocketed to nearly $25 per share at the end of 2024. But it has spent a lot of the time since then selling off, and now trades for less than $7 per share. However, that doesn't mean its business hasn't been performing impressively in the meantime.

The reality is that the stock got ahead of itself during its late 2024 run-up, but the company hasn't misstepped since then. It's delivering impressive results and growing at a solid pace. But has that primed the stock to double over the next year?

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SoundHound AI's business is booming

SoundHound AI combines artificial intelligence with powerful speech recognition. This has countless applications, but the biggest area of adoption right now is in restaurant order automation, specifically in drive-thrus. This is a fairly low-stakes application, and with a limited menu, there aren't many things for an AI to recognize and understand.

Eventually, SoundHound AI aims to become a larger part of customer service, particularly in industries such as banking, healthcare, and insurance. Companies in these sectors spend significant sums to staff their customer service lines; if SoundHound AI's product could automate a significant number of their interactions with customers, it would be one of the most useful AI applications to date.

SoundHound AI has several clients in these industries performing trials of its software and developing use cases for it. Investors will need to keep an eye on this: If the company's services prove to be a hit with large organizations, those types of contracts could take off and send the stock soaring.

Even with many trials underway, SoundHound AI's revenue rose 45% year over year to $62 million in Q2. The company is nowhere near profitable, but it has plenty of cash on the books to keep its operations going while it works its way toward that goal. There's a viable enough business model here that it should be able to raise capital to continue operations if it needs to, so investors shouldn't worry about SoundHound AI running out of funding.

The question is, how long will it be before SoundHound AI's software really takes off in the marketplace? That's the real unknown with the stock. Moreover, it could still lose out to another AI company's rival voice-interface offering. This makes SoundHound AI a high-risk, high-potential reward stock, but the stock is priced about right for that.

SOUN PS Ratio data by YCharts.

SoundHound AI trades for less than 15 times sales, which isn't a bad price to pay for a company growing this fast in a market that's potentially huge.

I'm not sure if SoundHound AI stock can double over the next year, but if sales of its software start to take off, I think it has a strong chance to soar. Otherwise, it may hang out in the sub-$10 range for the foreseeable future.

Keithen Drury has positions in SoundHound AI. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool has a disclosure policy.