Sign InSoundHound AI, Inc. (NASDAQ: SOUN) Analysis & Projections: Upward Momentum in Sight
Summary
On May 31, 2024, SoundHound AI, Inc. (NASDAQ: SOUN) closed at $5.05 with a 3.48% gain, buoyed by Nvidia's investment and positive technical indicators, yet fundamental concerns and high volatility warrant a cautious Hold recommendation, awaiting critical earnings data in August.
Technical Analysis
SoundHound AI, Inc. (NASDAQ: SOUN) closed on May 31, 2024, at $5.05, showing a gain of 3.48% from the previous day. The stock traded between $4.795 and $5.06 with a substantial volume of 16.62 million shares, although below the average volume of 49.09 million. The Relative Strength Index (RSI14) stands at 49, indicating a neutral position.
The stock's 50-day and 200-day moving averages are $4.95 and $3.21 respectively, showing a bullish trend. The Moving Average Convergence Divergence (MACD) is positive at 0.39, suggesting a potential upward momentum. The Average True Range (ATR) is high at 8.35, indicating significant volatility. Support and resistance levels are near the closing price at $5.04 and $5.09, respectively, with a stop-loss marked at $4.77.
Fundamental Analysis
SoundHound AI's market capitalization stands at approximately $1.66 billion. The stock has experienced a substantial increase, doubling this year primarily due to investment by Nvidia. However, caution is warranted due to underlying weak fundamentals. The company's earnings per share (EPS) is –$0.38, with a negative price-to-earnings (PE) ratio of –13.29, reflecting ongoing profitability challenges. The upcoming earnings announcement scheduled for August 13, 2024, will be critical for assessing future performance.
Analyst ratings reveal a conservative bullish consensus with 4 buys, 1 hold, no sell indications, and a consensus rating of "Buy". Price targets range from $4.90 to $9.50, with a median target of $7.20, suggesting upside potential from current levels.
Intraday and Weekly Projections
Given the technical indicators and the positive momentum driven by Nvidia's investment, SOUN is likely to exhibit a modest upward movement in the next trading day (June 3, 2024). The immediate resistance at $5.09 will be a critical level to watch. If surpassed, it could act as a launchpad for further gains. For the upcoming week, the stock may test higher resistance levels around $5.50 to $6.00, provided market conditions remain favorable and there is no negative news impact.
Intrinsic Value and Long-term Investment Potential
SoundHound AI has captured investor interest due to its involvement in the AI sector, specifically conversational AI. However, the intrinsic value appears to be clouded by its current negative earnings and the speculative nature of its recent gains. Long-term potential will depend significantly on the company's ability to transition to profitability and sustain revenue growth from its AI capabilities. The infusion from Nvidia brings strategic advantages that could improve operational efficiencies and market reach.
Overall Evaluation: Hold
Considering the technical momentum and analyst consensus, SoundHound AI appears to be in a promising position, yet the fundamental concerns warrant caution. The high volatility and speculative nature of the gains primarily driven by external investment rather than operational performance suggest that SOUN should be categorized as a "Hold". This allows existing investors to capitalize on potential upside while closely monitoring forthcoming earnings and strategic developments for signs of sustainable growth.
