After shaking off a sharp slump in October, SoundHound AI (SOUN 0.96%) an increase of 34.6% in November 2023, according to data from S&P Global Market Intelligence. Is this voice control specialist the dark horse of the artificial intelligence (AI) industry?
The company delivered solid third-quarter results and introduced new voice-enabled services for the restaurant industry. This mildly positive news was enough to make investors forgive SoundHound for its 20.9% decline in October. The stock rose 6.5% in the two months, right in line S&P 500 Index returns over the same period.
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SoundHound AI’s third-quarter revenue rose 19% year-over-year to $13.3 million. Adjusted net loss narrowed to $0.09 per share from $0.15. An average analyst had expected a net loss of $0.09 per share on revenue of about $12.8 million, meaning the company met or exceeded Wall Street expectations. At this point, the stock had already posted a 9% gain in November, but the report gave the SoundHound chart another boost.
A week later, investors had cautiously embraced the financial update, driving share prices up another 20%. That’s when SoundHound introduced a brand new voice assistant system for restaurant employees, designed to give everyone easy access to important information.
The SoundHound Employee Assist tool allows chefs and servers alike to get recipes, ingredient information, holiday hours and more with a quick voice command. The system is optimized for use in noisy environments such as a busy restaurant and the AI system can transmit this information to the employee’s earpiece when the normal conversation sounds like a data request.
SoundHound updates its recipe for success
The automotive industry has been SoundHound’s favorite market in recent years. A large and growing number of partners are integrating the Houndify voice control platform into their in-car experiences. These days the company focuses heavily on restaurants. Recent contract wins include giants like Krispy Kreme and White Castle. On the November earnings call, CEO Keyvan Mohajer announced a new testing agreement with “one of the largest global quick-service restaurants in the world.”
This spicy little company is on the road to success. SoundHound is still tiny in terms of quarterly revenue, but it’s building a significant presence in some huge target markets. Meanwhile, while the stock has posted strong gains over the past month, it still trades at a bargain valuation of 2.1 times closing sales.
It’s okay if you don’t want to bet a lot of money on an unprofitable AI expert like SoundHound. However, if you can stomach negative earnings in this risky but important era of customer acquisition and early revenue growth, SoundHound stock is worth a second look.
Anders Bylund 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.