Why SoundHound AI Stock Is Surging After Analyst Upgrade and Subscription Growth
SoundHound AI shares surged nearly 13% after Piper Sandler initiated coverage with an outperform rating. The company’s shift to a subscription model and strong Q1 revenue growth highlight its AI potential.
Why Shares of SoundHound AI Are Surging Today
Shares of SoundHound AI (NASDAQ: SOUN), a company specializing in voice-powered artificial intelligence, jumped nearly 13% as of late morning trading. The market reaction followed Piper Sandler’s initiation of coverage on the stock with an outperform (overweight) rating.
A Pure Play on AI Growth
Piper Sandler’s analyst highlighted SoundHound AI as an attractive way to invest in the AI sector. The company offers advanced AI voice assistants and is just beginning to tap into its market potential. The firm projects a serviceable addressable market reaching $30 billion by 2027. A key factor is SoundHound’s shift toward a subscription-based model, which could account for 90% of total revenue within a few years—up from just 4% two years ago.
The analyst set a price target of $12 per share, implying roughly 12% upside even after the recent price increase.
Early Signs of Financial Progress
SoundHound AI reported first-quarter 2025 revenue growth exceeding 150% year-over-year. On an adjusted basis, earnings per share came in at a $0.06 loss, while GAAP earnings stood at $0.31 per share. Despite a market capitalization of $4.3 billion, the company is still considered expensive by traditional metrics.
For investors interested in AI stocks with strong growth potential, SoundHound AI offers an opportunity to start building a position. However, it’s wise to avoid going all in immediately due to valuation and the early stage of its revenue transition.
Is $1,000 Investment in SoundHound AI a Good Move Now?
Before committing funds, consider that SoundHound AI was not included in The Motley Fool’s recent list of the top 10 recommended stocks. These top picks have a history of producing significant long-term returns; for example:
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