SoundHound AI Set to Report Q4 Earnings: Buy, Sell or Hold the Stock?

SoundHound AI SOUN is scheduled to report its fourth-quarter 2024 results on Feb. 27.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $33.49 million, suggesting growth of 95.29% from the year-ago quarter’s reported figure.The consensus mark for loss is pegged at 11 cents per share, unchanged over the past 60 days. SOUN reported a loss of 6 cents per share in the year-ago quarter.SoundHound AI, Inc. Price and EPS Surprise SoundHound AI, Inc. price-eps-surprise | SoundHound AI, Inc. QuoteSOUN’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 1.25%.Let’s see how things have shaped up prior to this announcement.Key Factors to Note for SOUN’s Q4 EarningsSoundHound’s fourth-quarter performance is likely to have benefited from the growing demand for its conversational AI platform, owing to the increasing popularity of Generative AI and large language models. SOUN is benefiting from a strong portfolio, a strong partner base and an expanding clientele. The demand for AI-driven customer service solutions in the restaurant and auto sectors is expected to have remained a key factor in driving SOUN’s performance in the to-be-reported quarter.SoundHound’s increasing global reach, particularly in the Chinese and Indian markets, and its partnerships with major companies like DayinTec and VE Commercial Trucks, is likely to have contributed to fourth-quarter growth. The expansion of language capabilities in the Indian market and continued growth in its partnership ecosystem are expected to have bolstered sales.SoundHound’s offerings, such as Smart Ordering, Employee Assist and Smart Answering, cater to this demand and are expected to have contributed to revenue growth in the fourth quarter.The Small and Medium-sized Businesses market for smart answering solutions is expected to continue growing, with a pipeline of opportunities across multiple sectors. With more than 30 million SMBs in North America, SoundHound's scalable solutions are well-positioned to capture this vast market.SOUN Stock Underperforms Sector, IndustrySOUN shares have plunged 44.8% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decline of 0.5% and the Zacks Computers - IT Services industry’s decline of 4.2 %.Year-To-Date PerformanceImage Source: Zacks Investment ResearchSOUN stock is also not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.In terms of the forward 12-month Price/Sales ratio, SoundHound AI is trading at 21.95, higher than its median of 19.41 and the Zacks Computer & Technology sector’s 6.35.Price/Sales (F12M)Image Source: Zacks Investment ResearchExpanding Partner Base Bodes Well for SOUN’s ProspectsSoundHound’s expanding clientele, which includes Rekor Systems REKR and Lucid Group LCID, is likely to have driven growth during the fourth quarter. The company’s key partnerships are strengthening its position in the AI-driven voice technology market, enhancing its offerings across different industries.SOUN’s partnership with Rekor Systems is combining the latter’s vehicle recognition software, Rekor Scout, with SOUN’s voice and conversational AI to create hands-free, voice-controlled systems for law enforcement and first responders. It aims to make emergency vehicles safer, more efficient and easier to use during critical situations.SoundHound also partnered with Lucid Group to launch the Lucid Assistant, a hands-free voice assistant for controlling vehicle functions. Powered by SoundHound Chat AI with generative AI technology, it improves in-vehicle experience with real-time data and intuitive controls.SOUN’s collaborations with NVIDIA NVDA, ARM, Perplexity, Olo and Oracle are expanding its portfolio. SoundHound’s launch of an advanced in-vehicle voice assistant powered by NVIDIA DRIVE brings real-time and generative AI capabilities for seamless, offline vehicle intelligence and personalized assistance.What Should Investors Do With SOUN Stock?SoundHound AI’s impressive growth, strong partnerships and innovative solutions position it as a major player in the AI-driven voice technology space. However, increasing competition in the AI market, particularly in the customer service and voice assistant space, is expected to have hurt SOUN’s performance in the to-be-reported quarter.SoundHound AI reported an EBITDA loss of $15.9 million in the third quarter of 2024, led by heavy spending on research and development, and strategic acquisitions to stay competitive. While these investments may fuel long-term growth, they can strain near-term profitability.SOUN aims to achieve positive adjusted EBITDA by the end of 2025, but economic uncertainties can delay progress. These factors can drag down shares in the near term.SoundHound AI currently has a Growth Score of F, which means it is not an ideal investment for growth-oriented investors. Its stretched valuation is concerning.SOUN currently carries a Zacks Rank #3 (Hold), suggesting that investors should wait for a better entry point to add the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis Report Rekor Systems, Inc. (REKR): Free Stock Analysis Report Lucid Group, Inc. (LCID): Free Stock Analysis Report SoundHound AI, Inc. (SOUN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks