Why Shares of SoundHound AI Are Soaring Today

Shares of the voice-powered artificial intelligence (AI) company SoundHound AI (NASDAQ: SOUN) traded nearly 13% higher as of 11:18 a.m. ET today. Analysts at Piper Sandler initiated coverage of the stock Tuesday morning with an overweight rating.

A pure play on AI

Piper Sandler analyst James Fish wrote in his initiation note that SoundHound, which provides advanced AI voice assistants, is a great way to play the AI trade, and the company has just begun to tap into its potential.

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He added that he sees a combined $30 billion serviceable addressable market by 2027. Furthermore, Fish and his team expect SoundHound to transition to more of a subscription model, in which revenue from this segment of the business could make up 90% of total revenue in just a few years.

Two years ago, subscription revenue represented just 4% of total sales. Fish has a price target on the stock of $12, implying another 12% upside, even after this recent rally.

Still early in the journey

SoundHound AI certainly looks to have a long runway and is making financial progress as well. Revenue in the first quarter of 2025 grew more than 150% year over year, while the company reported $0.31 earnings per share and a $0.06 loss per share on an adjusted basis.

With a $4.3 billion market cap, the stock is still expensive, so like many of my recommendations on these AI stocks with big potential, you can start to accumulate shares but don't need to go all in just yet.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.