Will SoundHound AI stock go 100x in 20 years?

SoundHound AI (NASDAQ resonance code: SOUN)It is a stock that has attracted a lot of attention this year. In the chip makerNvidiaThe company has become increasingly bullish after it was revealed that it has a stake in the company. With a relatively small market capitalization of $1.3 billion, investors are likely hoping that the stock will bring in some sizable returns.

But will SoundHound AI be the next AI stock to own, or even grow 100x in valuation over the next few decades?

Why SoundHound AI is a huge growth stock?

SoundHound AI is an exciting growth stock because its business has many ways to grow. Its B耑 Voice AI and voice recognition technology can be applied to electric cars, pre-dinner self-driving cars, and smart devices in general. Allowing customers to talk to AI applications through SoundHound's platform can help companies reduce overhead and payroll costs while potentially improving accuracy, such as in the ordering process.

With so many opportunities, it is not unreasonable to expect great things from the company, especially since it works closely with Nvidia. The company's business is still in the early stages of development, as evidenced by its rapid growth rate. In the fourth quarter of 2023, SoundHound AI's revenue increased 80% year-over-year to $17.1 million, and its net loss narrowed to $18.0 million from $30.9 million in the same period a year earlier.

In total, the company is moving in the right direction, and if it can capitalize on the opportunities, the value of the business is likely to increase dramatically. in 2025, management expects the company's net profit to be more than $100 million, more than double the $45.9 million it earned in 2023.

Can SoundHound AI grow to 100x valuation?

For SoundHound AI to become a 100x market cap company, its market capitalization would have to rise to around $130 billion. Over a 20-year timeframe, this is possible given the potential for AI to transform industries, and in 20 years, as stock values rise, $100 billion valuations will likely be more common than they are today, making it more likely that SoundHound AI will reach this milestone.

Generative AI has a lot of room to grow, and analysts at Grand View Research estimate that the global AI market, which was worth nearly $200 billion last year, will grow at a compound annual rate of 37.3% until the end of the decade, when it will be worth as much as $1.8 trillion. If SoundHound AI is to become a $10 billion company in 20 years, its value would need to grow at a rate of 26% per year. While this is a very high growth rate, it is not impossible considering the rapid development of artificial intelligence.

However, the biggest risk for investors is that SoundHound AI still faces a lot of uncertainty. While the AI market is full of potential, it still needs to prove itself as a leading voice AI company. So far, the company has seen strong growth, but it's been relatively small. And it will likely need to invest heavily in research and development to truly become a giant in the AI space. At the end of last year, the company had $95.3 million in cash and cash equivalents on its books, having burned through $68 million in the last 12 months alone. Without a stronger financial position, and with a large amount of capital needed to grow the business, there will be a need for frequent share issuances (i.e., dilution) in the future for investors. This means that until SoundHound AI builds a sustainable, cash-flow positive business, investors will be exposed to significant risk.

Should You Invest in SoundHound AI Stock Today?

Nvidia is only moderately invested in SoundHound AI at the moment, and that's probably for good reason - the company and the stock are still risky. Many tech companies offer similar services, making SoundHound AI a potentially competitive market. So far this year, SoundHound AI's stock price has doubled, even after a sharp drop in recent weeks.

While artificial intelligence is a promising growth opportunity, that doesn't mean SoundHound AI is a buttoned-up buy, even if its investor is Nvidia. It does have the potential to be a good long-term buy, but investors should be wary of the risks involved.

Should you invest $1,000 in SoundHound AI right now?

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David Jagielski does not own any of the stocks mentioned above.The Motley Fool holds a recommendation for Nvidia.The Motley Fool has a disclosure policy.

Could SoundHound AI Stock See a 100x Surge in 20 Years? This post was originally published by The Motley Fool.