SoundHound AI Stocks Surge 13% After Piper Sandler Upgrade

Shares of SoundHound AI jumped nearly 13% after analysts initiated coverage with an overweight rating. The firm sees a bright future as the company shifts to a subscription model, projecting significant revenue growth ahead.

Date: 27-05-2025

AI Rating: 7

Strong Analyst Support
SoundHound AI (NASDAQ: SOUN) has garnered attention with a recent coverage initiation by Piper Sandler, resulting in a 13% increase in stock value. Analyst James Fish’s overweight rating signals substantial upside potential, making it an attractive investment in the growing AI sector.

Revenue Growth Potential
The report reveals that SoundHound's revenue surged by over 150% annually in Q1 2025, underscoring its robust growth trajectory. Such growth is highly favorable for investors, suggesting sustained demand for its AI voice technology. Additionally, the shift towards a subscription-based revenue model positions the company to enhance recurring revenues, potentially bringing subscription income to account for 90% of total revenue in future years. This transition is significant, given that subscription revenue constituted merely 4% of total sales two years prior.

Earnings Performance
In terms of profitability, SoundHound reported earnings per share (EPS) of $0.31, though it also noted a $0.06 loss per share on an adjusted basis. The contrasting figures point to initial profitability while still indicating challenges that may affect long-term earnings sustainability. Sensible valuation measures are essential as the company navigates its growth phase.

Market Expectations
Moreover, the projected addressable market of $30 billion by 2027 emphasizes SoundHound's potential to capitalize on AI trends. With such a valuation hanging in the air, investors might speculate on future earnings and market presence, which could drive pricing volatility.

Valuation Concerns
Despite its promising growth prospects, SoundHound’s $4.3 billion market capitalization might still be considered high relative to its current revenue, which warrants caution among discerning investors. As the market incorporates the new analyst rating and growth narratives, the stock’s price may continue to reflect these sentiments.

Stocks: SOUN