SoundHound AI (SOUN 23. 70%) is making significant strides in the growing artificial intelligence (AI) sector with its conversational AI platform. This technology allows businesses to offer a range of services, including voice-enabled ordering at Chipotle and in-vehicle voice commands for Stellantis' car brands. With over 200 companies utilizing its technology, SoundHound has captured investor interest, leading to a more than 500% increase in its share price over the past year (as of this writing). The stock's rapid ascent might leave some investors questioning whether SoundHound AI's stock is a good buy at the moment. Let's explore this further. SoundHound's growth is notable There are compelling reasons for investors' interest in SoundHound. The company has shown remarkable growth, as reflected in its third-quarter results (ending Sept. 30). Sales jumped 89% to $25. 1 million, and management forecasts revenue of $165 million for 2025 at the midpoint, almost doubling the estimated $83. 5 million for 2024. SoundHound has also improved its customer base diversity, reducing its reliance on a few large clients for most of its revenue. Currently, just 12% of sales come from large customers, down from 72% last year, leading to a healthier revenue mix and less dependency on a few key clients. Additionally, SoundHound has diversified its customer sectors.

Previously, 90% of sales were from the automotive industry. Now, its revenue is more evenly spread across the auto industry, restaurants, financial services, healthcare, and insurance, each contributing 5% to 25% of sales. Considerations for investors Despite SoundHound's impressive revenue diversification and growth, investors should note that the company is not yet profitable. In the third quarter, SoundHound reported a non-GAAP net loss of $0. 04 per share, an improvement from a $0. 06 loss in the previous year. High-growth companies often operate at a loss, but investors should be aware that profitability might be some time away. Analysts predict a $0. 24 loss per share for SoundHound in 2024, narrowing to $0. 17 in 2025. Furthermore, SoundHound's stock appears expensive, with a price-to-sales ratio of 64. 8, compared to the S&P 500's (GSPC -0. 00%) P/S ratio of 3. 1. Verdict: Hold off on buying SoundHound AI SoundHound's stock seems too pricey to purchase at the moment. While there may be further growth potential, some of the price increase is possibly due to market enthusiasm for AI. Before buying SoundHound, consider waiting for a price dip. If you are determined to invest, ensure it remains a small portion of your portfolio.