SoundHound AI (NASDAQ:SOUN) is making a name for itself in the voice AI market, a field that’s still just beginning to catch on. Companies are only starting to realize how valuable it can be to let customers interact with systems by voice, improving service on the front end while driving efficiency behind the scenes. In that setting, SoundHound has already positioned itself as a key player, giving it a strong chance to benefit as demand for voice AI steadily builds.
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Oppenheimer analyst Brian Schwartz believes SoundHound has the right ingredients to capitalize on this opportunity, pointing to its strong conversational AI platform and a customer base that already sees it as a leader in speech-to-meaning technology, data science, unstructured analytics, and innovation.
The bull case, says Schwartz, centers on SoundHound’s position in this technological shift – speech-to-meaning – and its focus on automating a sizable market with Voice AI. Additionally, the 2026 revenue multiple could make the shares appear pricier than they truly are, given that the company entered this year with a backlog-to-subscription revenue ratio of 21:1.
Meanwhile, Schwartz counts several factors that could “generate durable growth” for SoundHound in the years ahead. These include a “monetization flywheel” fueled by network effects, being an early mover in automotive and quick-service restaurants, ongoing product innovations and expansion into new areas, plenty of room to grow in an underpenetrated market, strategic acquisitions, and opportunities to expand internationally.
However, there’s also a bear case to consider; that revolves mostly around the “durability of the moat.” SoundHound is up against major OEMs and “mega platform competitors” that build their own voice AI into their ecosystems, leveraging large user bases to bundle the technology, compete on price, or push commoditization in the market. On top of that, newer LLM providers are entering the space, offering solutions that can handle real-time voice interactions.
There’s also a risk to its revenue expectations; to reach its 2025 revenue guide, SoundHound will need a significant organic revenue boost in the second half of the year. But Schwartz points out that such a top-line acceleration in this 2H is rare in the software world, especially given current macro and geopolitical uncertainties. The “key drivers” in making the guide a reality include a strengthening Amelia business, momentum in QSR expansion sites, and the successful conversion of a sizable second-half pipeline.
So, while the company has plenty going for it, Schwartz’s concerns lead him to initiate coverage of SOUN with a Perform (i.e., Neutral). (To watch Schwartz’s track record, click here)
That said, of the 6 other analysts to have recently sized up SOUN’s prospects, only 1 joins Schwartz on the sidelines while all 5 others rate the stock a Buy, making the consensus view a Moderate Buy. The average target stands at $15.43, implying the shares will climb ~6% higher in the months ahead. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.