Discover the Growth Stock That Could Help You Achieve Millionaire Status

Every now and then, an exceptional company emerges at the perfect time, with the right product to change the game. If you’re like most investors, you might not have a large sum of money to begin your investment journey. To eventually achieve the dream of becoming a millionaire, it often requires setting aside a portion of your income over time, especially after covering basic life expenses.

It is essential to recognize that investing in stocks is a reliable way to outpace inflation. Historically, the S&P 500 has offered an average annual return close to 10%. However, imagine enhancing your portfolio with a growth stock that can potentially outperform the broader market for the long term. While these growth stocks come with higher risks, they may also yield significant rewards.

One such candidate is an artificial intelligence (AI) company known as SoundHound AI (SOUN 17.48%), especially following a notable 60% drop from its peak last December.

Understanding SoundHound AI

SoundHound might not be a name everyone is familiar with. It doesn't possess the same stature or recognition as leading AI companies like Nvidia or Microsoft. Currently, its market capitalization stands at a modest $3.8 billion, which might not attract much attention. However, many individuals may have benefitted from its technology without even being aware of it.

The core strength of SoundHound lies in its ability to convert spoken language into actionable digital data. This innovation enhances and accelerates processes like ordering at fast food drive-thrus, utilizing voice commands in vehicles, and creating smart home environments operated through voice instructions.

Notable companies such as Honda, White Castle, and Pandora have adopted SoundHound’s technology, with new clients continuously emerging.

While speech recognition isn't a new concept, having existed since the '90s, it often fell short of expectations due to its clunky nature. However, advancements in large language model-based AI have enabled it to finally meet its original potential.

Market research suggests that the global voice and speech recognition technology sector is expected to expand at an average annual rate of 17% until 2033. Recently, SoundHound reported a remarkable 85% increase in revenue, reaching $84.7 million in 2024, with expectations to double this figure in the coming year. Although the growth rate may slow afterward, it will likely be due to fulfilling the existing demand.

Understanding Recent Stock Movements

Given such promising indicators, one may wonder why SoundHound’s shares have experienced a significant decline of about 60% from its December highs. To comprehend this downturn, it is essential to revisit last October when interest in the stock surged as investors began to recognize its potential. During this time, SoundHound briefly became a meme stock, which contributed to the initial excitement.

As is often observed, the initial enthusiasm gave way to a dramatic decline. Compounding the situation, Nvidia recently disclosed the sale of its shares in SoundHound, which has caused further unease among investors. The recent fears surrounding SoundHound's fourth-quarter results were also unfounded, as the actual results were positive.

This pattern of rapid rise followed by decline isn't unique to SoundHound; many pre-profit tech stocks have displayed similar behaviors due to initial hype and investor enthusiasm. The bright side is that such significant volatility tends to stabilize over time, so while SoundHound shares may remain more unstable than others, the market is likely to begin assessing them more rationally moving forward.

It is crucial to remember that Nvidia’s choice to liquidate its holdings may have been partially motivated by realizing profits from its SoundHound investment. Nevertheless, analysts maintain an optimistic outlook for SoundHound, with most rating the stock as a buy or at least a hold. The consensus price target for the stock is around $14.06, representing more than a 50% upside compared to its current price.

Anticipating Future Volatility

It is worth noting the stock’s recent surge post-earnings could pose a challenge for investors seeking a better entry point. Many would prefer acquiring shares at lower prices, though it might be unlikely that the stock returns to its prior levels.

The key is to focus on the long-term potential rather than short-term fluctuations. For investors searching for a robust, high-growth addition to their portfolios, the timing of your investment becomes less critical. The previous volatility demonstrated by SoundHound’s stock firmly establishes its nature. Thus, investors who are willing to embrace the inherent risks associated with promising stocks may find SoundHound AI to be an exciting opportunity.

Disclaimer: The author holds no positions in any stocks mentioned. The information herein is for informational purposes only and should not be construed as financial advice.

investment, growth, stocks, technology