Buying and holding onto solid companies with disruptive potential can be a winning, long-term strategy for investors. Their potential to grow at a faster pace than their peers sets the stage for impressive stock market gains.
SoundHound AI (SOUN -6.79%) is one such company. Its artificial intelligence (AI) voice solutions are changing how clients handle food ordering, e-commerce, customer service, healthcare, and other functions. Each share of SoundHound is trading below $10 as of this writing, so if you have $10 to spare, here’s why you should tap into this promising growth stock.
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SoundHound is winning market share in a fast-growing industry
SoundHound offers multiple voice AI products, allowing customers to build custom solutions for their businesses. The company’s AI agents can speak, think, and act autonomously while interacting with customers, whether it’s in the drive-thru lane of a restaurant or on a company’s customer service line.
Importantly, SoundHound is not just winning over new customers but also gaining more business from existing ones. In its first-quarter report, management detailed new integrations of its voice AI solutions across multiple industries, and it also announced expanded partnerships with existing clients.
What’s more, the company’s Autonomics AI operations platform was named a leader in its segment by technology research and advisory firm ISG Research. The strength of SoundHound’s offerings explains why the company has been able to quickly expand its customer base. Best of all, the market in which SoundHound operates is still in its early stages.
Venture capital firm Andreessen Horowitz estimates the voice AI market increased 25% last year to $5.4 billion. SoundHound’s 2024 revenue growth of 85% is a clear sign the company is outpacing the market overall.
And for 2025, Andreessen Horowitz is expecting a 61% spike in the voice AI market to $8.7 billion. Meanwhile, SoundHound is guiding for full-year revenue to double at the midpoint of its guidance range of $157 million to $177 million.
The stock has terrific long-term growth potential
Based on the above projections, SoundHound could end 2025 with a 2% market share, and the voice AI opportunity will continue to expand with one estimate calling for 32% compound annual growth through 2032, when it will be a $40 billion annual market.
If SoundHound’s market share jumps to 10% of that 2032 forecast, its annual revenue would reach $4 billion. This level of growth is likely in the ballpark of what investors expect for this AI stock, which explains its expensive valuation. SoundHound is trading at 35 times trailing revenue as of this writing.
Following its recent slide, SoundHound can still be a solid pick for growth-hungry investors with a long-term mindset. However, anyone buying into the stock must be prepared to look past near-term volatility and give the company time to capitalize on its huge market opportunity.
Harsh Chauhan 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.
