Voice interface specialist SoundHound AI (NASDAQ:SOUN) – which enables convenient communication between user and machine – saw its shares rise dramatically on Thursday. Catapulting sentiment was an announcement earlier in the day that SoundHound will be acquiring Amelia AI, a specialist in enterprise-level artificial-intelligence-based solutions. In addition, speculation runs hot for SOUN stock as the underlying company is set to release its second-quarter earnings report.
According to a TechCrunch article, SoundHound will pay $80 in cash and equity for Amelia. The publication notes that Amelia’s valuation prior to the deal wasn’t clear. However, data from PitchBook revealed that the company – which develops custom AI agents for businesses – had raised at least $189 million. This total includes a $175 million funding from asset management firm BuildGroup in March 2023.
Potentially, the reason for SOUN stock moving up so strongly centers on credibility. Amelia enjoys a customer base that includes financial firm BNP Paribas (OTCMKTS:BNPQY), pharmaceutical giant Teva (NYSE:TEVA) and tech equipment firm Fujitsu (OTCMKTS:FJTSY).
When combined under the SoundHound umbrella, the two enterprises will have around 200 customers, including big banks and Fortune 500 companies. In total, the AI firm anticipates revenue of $150 million in 2025. That includes $45 million stemming from Amelia’s portfolio.
Earnings Fever Bolsters SOUN Stock
Another factor contributing to the blistering run in SOUN stock is the upcoming Q2 earnings report. Scheduled for after the market’s close today, Wall Street anticipates that the AI specialist will incur a loss of 9 cents per share on revenue of $13.09 million. If so, the top-line print would represent a 50% year-over-year increase, per TipRanks.
In the year-ago quarter, SoundHound posted a loss per share of 10 cents. However, the company mitigated the expected red ink, with forecasts calling for a loss of 12 cents. On the revenue front, the company generated $8.75 million, beating out the estimate of $8.07 million.
Prior to the acquisition announcement, analysts projected 2024 sales to hit $70.51 million, with a high-side view of $71.47 million. In the following year, the expectation was for sales to reach $103.5 million, with an optimistic estimate of $107.03 million.
SOUN stock overall has been rising thanks to key developments. Last month, SoundHound integrated its conversational AI system in several brands under automaker Stellantis (NYSE:STLA). However, a key concern is that the company is stretching its valuation. Right now, shares trade hands at 21.22X trailing-year revenue, which is hot compared to the underlying software application industry. The sector runs an average multiple of only 3.84X.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
