SoundHound AI Just Announced Major News for Shareholders

SoundHound AI (NASDAQ: SOUN) is a fairly popular artificial intelligence stock, thanks to its small size, huge growth, and major opportunity. But it has been a bit unloved as of late and is down for the year. However, after the news SoundHound AI just shared with investors, I think the stock could turn around and head higher over the rest of 2026.

So, what's the big deal with SoundHound AI? It just told investors what to expect for revenue in 2027, and its figure is impressive.

Image source: Getty Images.

SoundHound AI expects huge growth over the next few years

During SoundHound AI's Q1 earnings call, the company announced a few major items. First was its acquisition of LivePerson. This acquisition makes complete sense, as it is a conversational AI that allows customers to interact with an AI model. SoundHound AI is a leader in audio recognition, so by combining these two strengths, SoundHound AI expects to become a one-stop shop for a product that can take an audio input and return an audio output during a real-time conversation with a customer. That's a major market opportunity, and SoundHound AI looks primed to capture it.

In 2027, management told investors they should expect at least $350 million to $400 million in revenue. Over the past 12 months, SoundHound AI's revenue was $184 million, so SoundHound AI's revenue will see a major ramp-up in the near future.

SOUN Revenue (TTM) data by YCharts

Despite this revelation, SoundHound AI's valuation hasn't budged, and it's actually reasonably priced for how strong its revenue growth has been (it grew revenue at a 52% pace in Q1).

SOUN PS Ratio data by YCharts

A price-to-sales (P/S) ratio of 20 times isn't necessarily cheap for any stock, but when it's a software stock with potential for high profit earnings, and it's growing as fast as SoundHound AI, that's not a bad price to pay. If SoundHound AI can truly generate $400 million in revenue next year, that prices the stock at a fairly reasonable 9.5 times forward sales. Should SoundHound AI maintain its 20 times sales valuation, that would indicate the stock could double between now and the end of 2027, as long as the growth projection holds.

I think this makes for a compelling investment opportunity, especially in a high-risk, high-reward portfolio space. SoundHound AI has no guarantee of success, but I think it's heading in the right direction and has a compelling investment case with its latest acquisition and strong results.

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