SoundHound AI: A Rising Star in the Voice AI Market

Voice AI is a $140 billion market opportunity, and SoundHound AI is among the leaders in this field. The company's stock price has risen over 205% over the past three years, even as it still trades nearly 60% below its all-time high. While the stock carries some risks, it's an AI powerhouse that could be just getting started.

Sound and voice add an additional layer to artificial intelligence (AI) that often seems to fly under the radar. However, voice AI technology is crucial for delivering AI to real-world, consumer-facing applications. SoundHound AI specializes in voice AI and has been around long before the AI boom. The company began in the automotive industry, where vehicle brands have used its voice AI for applications such as hands-free voice commands.

Now, with the use cases rapidly expanding to include customer service agents, voice-based ordering, and others, the total addressable market is estimated to be $140 billion. However, the space is highly competitive. There are several other voice AI companies, including multiple 'Magnificent Seven' companies, who have voice AI baked into their broader offerings.

SoundHound AI may not be the largest player in the field, but it benefits from two distinct advantages. First, the company specializes in voice AI. Focus can be a powerful tool, and Apple's years-long struggles with its voice assistant, Siri, illustrate that size doesn't always translate to success. Second, SoundHound AI takes a neutral approach with its customers. It will white-label its technology, rather than force its logo on consumer-facing aspects of its customers' products and services. This stance can make SoundHound AI a preferable partner for many brands.

One of the hurdles for a promising company like SoundHound AI is expanding beyond that initial, successful market niche. Fortunately, the company is expanding beyond the automotive industry and gaining traction in new market segments. It acquired voice AI company Amelia last summer to expand its footprint and now works with some of the leading restaurants, hotels, gyms, and other consumer-facing businesses.

Acquisitions always help juice growth, hence the big jump from $85 million in 2024 revenue to an estimated $159 million this year. Still, estimates for next year indicate roughly 27% revenue growth. SoundHound AI is clearly growing, and the broader demand for AI could continue to provide the necessary tailwinds to sustain that growth, as long as the company continues to win business.

SoundHound AI's valuation is steep enough to make one pause. The stock trades at almost 25 times 2025 revenue estimates. That valuation isn't so high that it dooms the stock to underperform for years on end, but it does leave the company with a tighter margin for error. Growth must continue, and management must operate the business cleanly. But if the company delivers on its revenue estimates and sustains similar growth beyond next year, the stock can grow into and beyond its current price tag.

SoundHound AI must continue to differentiate itself from larger competitors. That's not a given, which makes the stock a bit risky. Still, that's par for the course with most up-and-coming companies. If things go well, SoundHound AI's impressive voice AI technology and promising growth potential could yield lucrative rewards for investors over the coming years and beyond.