SoundHound AI, Inc. (NASDAQ: SOUN) Analysis and Outlook: Hold Candidate with Potential Upside, 1 week ago Technical Analysis

SoundHound AI, Inc. (NASDAQ: SOUN) closed at $4.19 on July 05, 2024, showing a 6.62% increase from the previous close. The key support level identified is at $4.17, while the resistance level is at $4.77. The stock's Relative Strength Index (RSI14) of 32 suggests it is approaching oversold territory but has not yet reached a significantly oversold state.

The 50-day moving average stands at $4.61, which is above the current price, indicating recent downward pressure. Conversely, the 200-day moving average is $3.46, showing an overall upward trend for the longer term. The Moving Average Convergence Divergence (MACD) over three months is -0.38, signifying a bearish trend in the short term.

With the Average True Range (ATR) at 5.80, the stock exhibits high volatility. The trading volume of 13.74 million is lower than the average volume of 22.81 million, which can indicate waning investor interest or caution as the earnings announcement date approaches on August 13, 2024.

Fundamental Analysis

SoundHound AI, Inc. holds a market cap of approximately $1.37 billion. Despite this, the company has an EPS of -$0.38 and a PE ratio of -10.99, indicating negative earnings, a concern for value-oriented investors. However, the company’s substantial backlog of long-term contracts worth $682 million offers a positive outlook for future revenue streams.

Intrinsic value projections depict a mixed sentiment among financial analysts. With a high target price of $9.50, a low target of $4.90, and a consensus median target of $7.2, the average target implies a potential upside from the current price.

The analyst consensus leans towards a "Buy" with four analysts classifying it as such and one holding a stance. The absence of "sell" or "strong sell" ratings reinforces positive sentiment for the stock's medium to long-term potential.

SoundHound AI, Inc. Outlook for the Next Trading Day and Upcoming Week

For the next trading day (July 08, 2024), the stock's movement may be influenced by recent news, particularly the upcoming earnings announcement. With the current technical indicators, SOUN stock may experience a slight pullback as it hovers near the identified support level of $4.17. Should it break this support, the next critical observation will be how it handles the $4.00 psychological threshold.

Over the upcoming week, further developments regarding market sentiment for AI stocks and investor interpretations of SoundHound's role in the growing AI market could fuel volatility. Given the RSI and MACD signals, there is potential for a mildly bearish consolidation phase before a stable territory is found.

Long-term Investment Potential and Intrinsic Value

Long-term investors might be encouraged by SoundHound AI’s considerable contract backlog and its position within the evolving AI industry, where the adoption of voice AI assistance presents substantial growth opportunities. Moreover, the company's inclusion in discussions about “best under $10 stocks” and “potential millionaire-maker technology stocks” aligns with favorable market perceptions.

However, intrinsic valuation must account for the firm's negative earnings and the high volatility indicated by the ATR. Nonetheless, a positive earnings trajectory based on future contract fulfillment can significantly alter the valuation landscape.

Overall Evaluation: 'Hold' Candidate

Considering the current technical and fundamental analysis, SoundHound AI, Inc. is categorized as a 'Hold' candidate. The substantial contract backlog and favorable long-term industry prospects provide support for cautious optimism. However, short-term indicators show resistance and volatility, suggesting that current price levels may not yet reflect an ideal entry point for new investments or aggressive buying. Investors may prefer to monitor the upcoming earnings announcements and overall market conditions before reassessing positioning in the stock.

Check full SoundHound AI, Inc. forecast and analysis here.