SoundHound AI Inc (SOUN)

[BornAgain]

‘Pullback Will Be Short-Lived’: Daniel Ives Says Buy These 2 AI-Driven Tech Stocks — Including One With 260% Upside

Boosted by the AI craze, it’s been a vintage year for tech stocks, but the summer season is proving to be a bit shakier so far. Since mid-July, the trend has been down, with the tech-heavy NASDAQ shedding ~5%.

This naturally raises the question: should we be ringing the alarm bells due to this shift?

Not at all, says Wedbush’s Daniel Ives, a 5-star analyst rated in the top 2% of the Street’s stock pros. Ives believes that the new bull market is simply taking a breather, and he asserts that the pullback will be short-lived. There have been ample indications during this earnings season that the overall trend is upward.

“The last few weeks June earnings season for the tech sector has revealed a number of dynamics now happening among enterprise and consumer spending globally, which we expect ultimately will push tech stocks higher despite this near-term pullback,” the top analyst explained. “We firmly stick with our bullish call that a 12%-15%+ in tech stocks will be in the cards heading into year-end as the new tech bull market has begun in our opinion.”

Against this backdrop, Ives has pinpointed an opportunity in two AI-driven tech stocks that he thinks are ready to make the most of this bull market, with one boasting a whopping 260% upside potential. We ran the pair through the TipRanks database to find out what other Street analysts have to say too. Let’s check the results.

SoundHound AI (SOUN)

The AI revolution is one that fits our first Ives-endorsed name to a tee. SoundHound AI is a leader in voice and audio recognition, employing advanced machine learning and natural language processing techniques to enable seamless and intuitive interactions with audio content. SoundHound AI is renowned for its exceptional music recognition capabilities, allowing users to identify songs by simply humming, singing, or even describing a few lyrics.

In addition to its music recognition prowess, SoundHound AI extends its capabilities to voice assistants and smart devices, allowing users to interact with technology through voice commands and natural language. Its versatile applications range from voice search and command interpretation to enabling hands-free control of various devices in homes, cars, and other environments.

Over the years, the company has nabbed deals with an impressive list of companies including Hyundai, Mercedes-Benz, Kia, Deutsche Telekom, Snap, and Vizio.

Turning to the financials, Wall Street seemed pleased enough with the company’s latest quarterly readout. In Q2, revenue climbed 42% year-over-year to reach $8.8 million, higher than the Street’s $8.1 million forecast. Robust product royalties and a strong showing in the automotive segment saw the backlog record a 20% increase to $339.2 million.

Due to the scaling of the business and improving data center efficiency, the company delivered impressive gross margins of 79.1% while cost savings helped EPS of ($0.10) beat the consensus estimate of ($0.12).

Looking ahead, SoundHound reiterated its expectation for 2023 revenue in the range between $43 to $50 million.

It all points to future success in an AI-driven world, say Ives. “With AI getting more eyes than ever and creating an expanding TAM, SoundHound is well-positioned to capitalize on the demand for AI chatbots with more use cases being provided every day while expanding its voice-enabled ecosystem to accelerate growth,” he said. “Overall, we believe this was a major step in the right direction for the SOUN story as the company continues to build toward profitable growth with stable revenue pillars and strong monetization capabilities to capture demand from small players to major enterprises as management across industries seeks ways to optimize efficiencies.”

Considering all of the above, Ives holds high hopes. Along with an Outperform (i.e. Buy) rating, he assigns SOUN a $7 price target. This projection allows for a substantial 260% upside from the current share price of only $1.9. (To watch Ives’ track record, click here)

Two other analysts have recently waded in with SOUN reviews, and both are also positive, making the consensus view here a Strong Buy. The average price target is not quite as optimistic as Ives’ objective, but at $4.60, it still implies that shares will potentially yield impressive returns of 137% in the year ahead. (See SOUN stock forecast)

https://finance.yahoo.com/news/pullback-short-lived-daniel-ives-203916458.html