One in all the best hypergrowth stocks in the marketplace is a terrible buy right away, but that ought to change in 2025. An overheated stock price should cool down in the subsequent few months, while the underlying long-term success story stays.
Consequently, I would not touch shares of SoundHound AI (NASDAQ: SOUN) right away. At the identical time, I’m prepared to pounce if and when the soaring stock price comes back to earth.
Here’s why I’m enthusiastic about SoundHound AI’s future, and what I want to see before buying the stock again.
SoundHound AI has a fantastic future.
Voice commands are making their way into many industries. Drive-through ordering windows and phone-based menus are already popular examples, together with in-car infotainment systems and various consumer electronics devices. The standard tech giants all have some form of voice interpretation technology happening, including Apple‘s Siri and Amazon‘s Alexa assistants.
Despite the presence of deep-pocketed household names, tiny SoundHound AI is winning voice-control contracts all over. The corporate already has long-term contracts with several automakers and fast-food chains. The roster is growing, and so is SoundHound AI’s product portfolio. Just this month, for instance, the corporate combined its two flagship technologies to enable food orders through your automobile stereo.
So this little company goes places and I am unable to wait to see the stock construct value in the long term.
But I’m not a SoundHound AI buyer right away. As a substitute, I sold about half of my position in December, locking within the gains from a speculative price surge.
SoundHound AI quickly built a following in well-known meme stock channels online, setting the top off for a skyrocketing price surge. The stated idea was to make the most of a high short-seller interest, forcing bearish investors to cover their bets in a so-called short squeeze. The move appears to have peaked over the vacations, and the stock now trades roughly 47% below the highest of that price spike.
I look ahead to rebuilding my decimated SoundHound AI position, but it surely’s still too early. The stock looked overpriced within the spring of 2024, when a small investment by Nvidia inspired rumors a few potential buyout or perhaps an exclusive partnership. The rumors haven’t materialized and SoundHound AI’s chart never even reached $9 in that bullish cycle.
Again, I even have high hopes for SoundHound AI’s business prospects in the long term. Still, many things can go improper along the way in which and the stock has not yet earned the lofty valuations it saw in recent weeks. The value to sales ratio topped out at 110.5 on December 26. It has backed all the way down to 73 times sales in January 13, but that is still an excessive amount of.