Can SoundHound AI Stock Help You Become a Millionaire?

Buying solid businesses and holding them for the long term can help you significantly increase the value of your investment. This strategy allows you to leverage the power of compound interest while also benefiting from disruptive innovation.

For example, you invested $100,000. nvidia and netflix 10 years ago it had increased significantly over the years.

NVDA data from YCharts

While Netflix has turned that money into nearly $1 million, Nvidia has made investors millions over the past decade. What these two companies have in common is that they have been disruptive leaders in their markets. Netflix shook up the movie rental industry and eventually pioneered the content streaming market. Nvidia brought its expertise in gaming graphics cards to the data center market and is now playing a central role in the proliferation of artificial intelligence (AI).

But this article isn’t about Nvidia or Netflix. Instead I will focus on the following outlook. SoundHound AI (Soun) — Although we are now a very small company, we are sitting in a huge addressable market. Let’s see if SoundHound AI can replicate the stock market performance of Nvidia and Netflix and transform $100,000 into $1 million.

What does SoundHound AI do?

SoundHound AI serves the nascent conversational intelligence market, an industry that is gaining prominence as adoption of voice-enabled AI solutions increases. Grand View Research estimates that the global conversational intelligence market could grow at nearly 24% annually by the end of the decade. The company notes that this market was worth $7.6 billion last year, and could generate nearly $42 billion in revenue by 2030, according to projected growth.

SoundHound AI seeks to capitalize on this market through its Voice AI platform, which helps companies develop and deploy a variety of AI-enabled voice capabilities, including automatic speech recognition, natural language understanding, text-to-speech, and personalized wake commands. The company provides customized AI-based voice solutions to a variety of industries, including automotive, restaurants, contact centers, banking, and retail.

The good thing is that SoundHound AI has built an impressive customer base with a following. mainly, hyundai, Qualcomm, Hondasquare, snap, Others. Moreover, because SoundHound serves a variety of industries, it estimates that the overall market size will reach $160 billion by 2026.

The good thing is that SoundHound is already benefiting from this large market opportunity, as recent results show.

The company is showing solid financial growth.

SoundHound AI generated nearly $29 million in revenue through the first nine months of 2023. It was targeting $18 million in revenue for the current quarter, at the midpoint of its guidance range, putting it on track for full-year revenue of $47 million.

While these are small numbers in the context of Wall Street, it’s worth noting that SoundHound’s guidance points to a 51% year-over-year revenue increase. This is higher than the 47% revenue growth the company recorded in 2022. Even better, analysts expect SoundHound AI to maintain healthy revenue growth over the next two years.

SOUN revenue estimates for current fiscal year data via YCharts

But don’t be surprised to see SoundHound surpassing analyst expectations. This is because the company has a cumulative reservation backlog worth $342 million. This points to a healthy revenue pipeline, as bookings ideally reference the value of the contract you have entered into with the customer.

As the chart above shows, SoundHound AI is estimated to generate a total of $165 million in revenue in 2024 and 2025. With the company sitting on a much larger backlog, it could exceed these expectations and deliver solid profits for investors. But over the long term, can SoundHound AI stock rise enough to turn a $100,000 investment into $1 million? Let’s explore.

Could this stock make you a millionaire?

According to the chart in the previous section, SoundHound generated annual revenue of $31 million in 2022, with its top line expected to reach nearly $96 million in 2025. This implies a compound annual revenue growth rate of 45% over three years.

The fast-growing nature of the markets in which SoundHound operates and the enormous addressable opportunities facing the company suggest that it can maintain a healthy growth pace over the long term. We saw in an earlier article that the conversational intelligence market is expected to grow at 24% per annum until 2030.

Assuming that SoundHound can match the market’s growth from 2026 to 2030, its top line could increase to $280 million by the end of the decade (using projected 2025 revenue of $95.7 million as a baseline). SoundHound AI currently has a price-to-sales ratio of nearly 12, which seems reasonable considering its impressive growth.

Assuming the sales multiple declines to 10 by the end of 2030, SoundHound’s market cap could jump to $2.8 billion within a decade. That’s a 430% increase from current levels, meaning $100,000 invested in stocks today could be worth $530,000 in seven years. Of course, this is way off the million-dollar level, but what’s worth noting here is the impressive upside the stock can offer over the long term.

So while SoundHound may not be able to turn a $100,000 investment into $1 million over the next seven years, it wouldn’t be surprising to see it do the same over the long term, considering the massive business growth it will achieve by the end of 2018. 10 years. That’s why investors looking to buy AI stock may want to consider buying and holding SoundHound AI as its strong long-term growth could lead to healthy stock market gains.