One Hypergrowth Tech Stock to Watch in 2025

The current market may not be the best time to invest in a high-flying tech stock, but opportunities can arise with the right timing. Planning ahead can be beneficial.

One standout in the hypergrowth category is SoundHound AI (SOUN 8.60%), a stock that, despite its current inflated price, could present a great buying opportunity come 2025. The company’s stock has experienced an overheated surge lately, but it is expected to cool off soon. Meanwhile, SoundHound AI remains a promising long-term investment.

The Potential of SoundHound AI

SoundHound AI is well-positioned for the future, particularly as voice technology continues to expand across different sectors. Examples include drive-thru ordering and phone-based services, as well as in-car systems and various electronic devices. Major tech companies like Apple and Amazon have their own voice recognition technologies, such as Siri and Alexa.

Despite the competition from these big names, SoundHound AI is securing voice-control contracts with a range of industries. Their partnerships have already extended to several automakers and fast-food chains, and their product offerings are expanding as well. Recently, they merged their leading technologies, allowing customers to place food orders directly through their car audio systems.

This small company is making strides, and I believe it has a bright future ahead in the long run.

Current Stock Valuation Challenges

However, right now, I would avoid buying SoundHound AI stocks at their current prices. I sold about half of my shares in December, taking advantage of the gains from a speculative price hike.

The stock gained traction in popular meme stock forums, leading to a significant price surge. This sudden spike appeared to be related to short-selling interests, which resulted in a price phenomenon known as a short squeeze. The stock seems to have peaked during the holiday season and is now trading approximately 47% lower than its peak value.

I am eager to rebuild my investment in SoundHound AI, but the timing isn't right yet. The stock had been perceived as overvalued in the spring of 2024, particularly following a modest investment from Nvidia, which sparked rumors of a possible acquisition or partnership. However, these rumors did not materialize, and the stock did not even reach the $9 mark during that bullish phase.

While I remain optimistic about SoundHound AI’s prospects, there are many risks to consider. The stock's valuation has not yet justified the heights it reached recently. Its price-to-sales ratio soared to 110.5 on December 26 but has since fallen to 73 by January 13. That valuation is still concerning.

I would be interested in SoundHound AI if the stock price drops into the single-digit range. Furthermore, I am keeping a close eye on the company’s business performance. The third-quarter report released in November indicated strong revenue growth and reduced net losses, with management providing ambitious revenue projections for the next couple of years.

Looking for the Right Moment to Invest

SoundHound AI's business performance appears to be progressing well. The excitement generated by meme stocks is likely to dissipate over the coming months, following a significant portion of speculative trading that took place in December, as evidenced by declining prices and trading volume.

I am ready to re-enter the SoundHound AI market, but only if the stock continues to decrease from around $13 to the $6 to $7 range. Each investor should, of course, assess their own positions and targets.

investing, stocks, technology