SoundHound AI Amplifies Its Presence with New Partnership in Restaurant Voice Ordering

SoundHound AI SOUN has formed a partnership with Torchy’s Tacos to introduce its Smart Ordering voice AI across the chain’s 130 locations. This state-of-the-art system, optimized for the Torchy’s Tacos menu, manages all incoming calls, processes custom orders, and responds to inquiries about the menu or store. This technological advancement aims to enhance operational efficiency, allowing staff to concentrate more on food preparation and in-store service.

Strategic Growth in Voice AI for Restaurants

This collaboration strengthens SOUN’s position in providing voice AI solutions to the restaurant and quick-service industries. With a diverse portfolio, numerous partnerships, and a growing customer base, the company is poised for continued success.

SOUN provides conversational intelligence via independent voice AI solutions available in 25 languages, which can be used in both cloud-based and hardware devices.

The company’s shares have experienced a remarkable 608% increase year-to-date (YTD), significantly outperforming the Zacks Computer & Technology sector’s growth of 33% and the Zacks Computers – IT Services industry’s return of 19.4%.

YTD Performance Overview

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However, the question remains: Can SOUN maintain this impressive momentum? Let’s explore further.

Concerns About Overvaluation

Currently, SOUN stock appears to be overvalued, indicated by its Value Score of F.

The shares are trading at a hefty forward 12-month Price/Sales ratio of 35.08X, which is significantly higher than the sector average of 6.35X.

Price/Sales Ratio (F12M)

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Promising Innovations Across Multiple Industries

SoundHound AI benefits from its growing impact in various sectors, such as automotive and restaurants, largely due to its innovative technologies. The company holds over 270 patents, including more than 155 already granted and 115 pending.

In the restaurant industry, SOUN continues to expand its services, now offering drive-thru phone ordering and employee assistance tools. Its notable partners include prominent brands like Panda Express, Church’s Texas Chicken, White Castle, Firehouse Subs, Five Guys, and Chipotle Mexican Grill CMG. Additionally, SOUN’s collaboration with Applebee’s has successfully integrated voice AI into two-thirds of their locations.

As a leader in phone ordering technology for restaurants, SOUN has surpassed 100 million AI-handled customer interactions.

In the automotive sector, SOUN has also made significant strides by introducing the SoundHound Chat AI voice assistant, which incorporates ChatGPT into vehicles from Peugeot, Opel, Vauxhall, Alfa Romeo, Citroën, and DS Automobiles across 11 European countries.

Recently, the company announced a new customization tool aimed at enhancing customer interactions with automotive brands, demonstrating its commitment to innovation.

Strategic Partnerships Supporting Revenue Growth

SOUN’s collaborations with NVIDIA NVDA, ARM, Perplexity, Olo, and Oracle are broadening its offerings. The launch of an advanced in-vehicle voice assistant utilizing NVIDIA DRIVE technology allows for real-time AI capabilities, ensuring offline access to vital vehicle information and personalized support.

Through a partnership with Perplexity, SOUN is enhancing its Chat AI functionality with cutting-edge online large language models, improving the quality of voice assistant responses.

In India, SOUN has teamed up with VE Commercial vehicles, a collaboration involving Volvo and Eicher, to deliver voice AI assistance. Additionally, the partnership with Kia has expanded to include Hindi language support in various models.

SOUN has gained traction in multiple sectors through successful AI integrations during the third quarter. Key partnerships with Telefonica TEF, MUSC Health, EXL, Truity Credit Union, and Turret are noteworthy, along with a renewed federal contract collaboration with General Dynamics Information Technology for a U.S. military branch.

Earnings Estimates Show a Mixed Picture

Looking ahead, SoundHound AI expects revenues in 2024 to fall between $82 million and $85 million. The company aims to utilize acquisitions for revenue synergies and is forecasting 2025 revenues of $155 million to $175 million.

The Zacks Consensus Estimate for 2024 revenues is currently at $83.63 million, reflecting an anticipated year-over-year increase of 82.3%. The consensus estimate for 2024 losses stands at 38 cents per share, a slight widening over the past month.

For 2025, the revenue consensus is set at $162.99 million, indicating a potential year-over-year growth of 94.91%. Meanwhile, the expected loss per share for 2025 is 27 cents, marking a 28.57% increase in loss expectations over the last 30 days.

SOUN has achieved a mixed performance, beating the Zacks Consensus Estimate in two out of the last four quarters, with an average earnings surprise of 1.25%.

SoundHound AI, Inc. Price and Consensus Overview

SoundHound AI, Inc. Price-Consensus Chart | SoundHound AI, Inc. Quote

Should You Buy, Sell, or Hold SOUN?

Given SOUN’s robust AI-driven portfolio, it is well-suited to take advantage of increasing demand in sectors such as automotive, restaurants, banking, and military. This would be promising for long-term investors.

Currently, SOUN stock is trading above both the 50-day and 200-day moving averages, indicating a bullish sentiment.

SOUN Stock Trading Patterns

Image Source: Zacks Investment Research

Nevertheless, with a Growth Score of F, SoundHound AI represents a more precarious investment option for growth-seeking investors. Its high valuation remains an area of concern.

Currently, SOUN is classified with a Zacks Rank of #3 (Hold), indicating that potential investors should wait for a more opportune moment to add the stock to their portfolio. You can access the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Additionally, explore in-depth analyses for the following companies:

• Telefonica SA (TEF): Free Stock Analysis Report
• Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
• NVIDIA Corporation (NVDA): Free Stock Analysis Report
• SoundHound AI, Inc. (SOUN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.