SoundHound AI Price Target Boosted to $26 Amid Surging Demand and Strategic Growth

H.C. Wainwright analysts significantly raised the price target for SoundHound AI (NASDAQ:SOUN) to $26 from $8, reiterating a Buy rating. The upgrade reflects the company’s impressive growth trajectory, fueled by rising demand for its AI-driven services and strategic positioning in diverse industries.

Since reporting third-quarter results in November, SoundHound AI shares have skyrocketed by 187.7%, vastly outperforming the broader market, including a 6.2% decline in the Russell 2000 index. This surge is attributed to several factors, including high-profile contracts with Church’s Texas Chicken and Torchy's Tacos, representing a combined footprint of over 1,600 restaurant locations. These deals highlight the company’s growing dominance in the restaurant sector while opening doors for expansion into other industries like retail, healthcare, and financial services through recent acquisitions.

SoundHound AI’s growth is further supported by an improving market environment for small-cap growth stocks, driven by declining interest rates. Additionally, its positioning as a pure-play AI company creates scarcity value, justifying a premium valuation multiple. At its current market cap exceeding $7 billion, SoundHound has also become an attractive portfolio candidate for institutional investors, increasing its potential investor base.

While current valuation levels may appear stretched, the analysts remain optimistic about the company’s scalable platform, which is poised to drive future growth in revenue, adjusted EBITDA, and earnings. Acknowledging that share price appreciation is unlikely to follow a linear path, the analysts anticipate further upside through 2025, justifying the increased price target.