AI SoundHound (HER -9.98%) The stock is seeing heavy selling during Tuesday trading. The conversational artificial intelligence (AI) company’s stock price was down 8% as of 11:45 a.m. ET and had fallen as much as 11% earlier in the session. Meanwhile, the S&P500 the index was down 0.5%, and the Nasdaq Composite the index was down 1.2%.
SoundHound AI is losing ground today in conjunction with an uptick in selling pressures in the broader market. In addition to the bearish trading environment, the company’s shares are experiencing heavy selling due to investors’ high expectations regarding potential news from the Consumer Electronics Show (CES).
SoundHound AI stock falls as CES begins
Nvidia CEO Jensen Huang kicked off this year’s CES show with a keynote last night, and some SoundHound AI investors were hoping the tech leader would mention the conversational AI specialist in his keynote. Nvidia has invested in SoundHound, and even seemingly unrelated news for the AI leader is sometimes enough to cause substantial moves for the smaller company’s shares. Unfortunately, Huang’s keynote came and went without mention of SoundHound.
The conversational AI specialist today unveiled its first in-vehicle voice commerce platform, but it seems investors were hoping for more revolutionary news. The upcoming platform will allow users to order from restaurants directly through their vehicle’s infotainment system. SoundHound is demonstrating the platform at its CES booth and will be at the show until January 10.
What’s next for SoundHound AI?
As today’s trading indicates, SoundHound AI stock is predisposed to volatile moves. With a market capitalization of around $6.8 billion, the company is valued at around 41 times expected revenue for this year. This is a highly growth-dependent valuation that sets the stage for downward pressure if positive catalysts fail to deliver or meet expectations or if the market as a whole turns bearish.
On the other hand, the stock’s decline at the start of this year’s CES probably doesn’t say much about the company’s long-term future. The company has been adding customers and growing sales at an encouraging rate, and has built a highly scalable platform with a wide variety of use cases that have yet to be leveraged.
In its latest quarterly update, management raised its median sales growth target for 2024 to 82%. Better yet, the company expects its sales growth to accelerate to more than double in 2025. So while SoundHound AI stock remains a high-risk, high-reward play, the company has experienced impressive growth and has great opportunities ahead.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Ranks and Recommends Nvidia. The Motley Fool has a disclosure policy.
