SoundHound (SOUN – Free Report) is a Zacks Rank #2 (Buy) and it sports an F for Value and a D for Growth. This stock soared 43% on Friday as investors embraced a bevy of AI stocks. Let’s explore more about this company in this Bull of The Day article.
Description
SoundHound Inc. is an innovator of conversational intelligence, offers an independent voice AI platform which enables businesses across industries to deliver conversational experiences. SoundHound Inc., formerly known as Archimedes Tech SPAC Partners Co., is based in New York.
AI Names Moon On Friday
I am just like the rest of you. I searched the internet for some of those really bad articles that highlighted 5 AI stocks. I was wondering how they could include names like Nvidia (NVDA) or Microsoft (MSFT). Those are not the names that I am looking for. I want to see the stocks that the “apes” are going to be chasing for the rest of the month.
Here is my list of AI names that I am going to be watching closely.
SoundHound (SOUN – Free Report) happens to have the best Zacks Rank… but that doesn’t mean that a host of other names in the space shouldn’t be on your radar screen.
UiPath (PATH – Free Report) is a Zacks Rank #3 but fell nearly 4% Friday amid a run in AI names. This name frequently lands on those lists of AI stocks, so I felt the need to add it to my list.
BugBear.ai (BBAI – Free Report) is a Zacks Rank #4 (Sell) but it soared 44% on Friday.
C3.ai (AI – Free Report) is also a Zacks Rank #4 (Sell) but it jumped 18% on Friday. Due to the market cap and liquidity of C3.ai (AI – Free Report) it would be among the top of my list of names that could move big again on Monday.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For SoundHound, I see two straight beats of the Zacks Consensus Estimate. That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).
Earnings Estimates Revisions
The Zacks Rank tells us which stocks are seeing earnings estimates move higher.
Over the last 60 days, earning estimates have moved up for SOUN.
This quarter has held still at a loss of $0.17.
Next quarter has seen a move higher by a penny from a loss of $0.15 to a loss of $0.14.
The full fiscal year 2023 has increased from a loss of $0.51 to a loss of $0.41 over the last 60 days.
Positive movement in earnings help move this stock to a Zacks Rank #2 (Buy).
Valuation
The valuation for this name is rather difficult to articulate. The Zacks Financial Overview page is filled with “NA’s” as there has only been 3 quarters of reporting data. The company is also running a loss so a lot of traditional metrics like PE and forward PE are not there for us to lean on. That said, the craze that ChatGPT launched has many investors throwing old school valuation metrics out the window.
SOUN has a bookings backlog of $302M and revenues of $11.2M in the most recent quarter. The stock closed at $2.82 on Friday for a market capitalization of $560M. The stock saw heavy volume of 45M shares, so this is a stock that you need to keep on your radar screen.
I would also keep an eye on C3.ai (AI – Free Report) which has a low Zacks Rank, but market cap of nearly $3B and a high degree of liquidity (it traded 71M shares of Friday).
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