SoundHound AI Pulls Back After Red Hot Rally, But Retail Stays Firmly Bullish

SoundHound AI, Inc. ($SOUN) shares snapped a three-session winning run and traded sharply lower on Tuesday, but retail isn’t yet ready to give up on the stock.

Thanks to the recent winning streak, the stock raced to a record high of $19.69 on Monday, bringing the year-to-date gain to a massive 829%. The stock began to trend up amid the Nov. 5 presidential election, and the rally started to pick up steam after the conversational artificial intelligence (AI) company announced a couple of deals. 

SoundHound AI also said it would showcase its first-of-its-kind voice AI for automotive at the Consumer Electronics Show (CES), which will be held in Las Vegas from Jan. 7 to Jan. 10.

Wedbush analyst Daniel Ives on Sunday raised the price target for SoundHound AI stock to $22 from $10, reiterating an ‘Outperform’ rating. He attributed the action to the elevated momentum SoundHound AI is seeing and the continued demand for its voice AI solutions heading into 2025. 

“SOUN is in the early stages of capitalizing on its growth initiatives with enterprise AI demand just starting as this AI spending wave which represents a potential $1 trillion opportunity over the coming years,” the analyst said.

Ives viewed SoundHound AI as a long-term winner in the AI revolution. 

The analyst expects the company to leverage its partnership with Nvidia Corp. ($NVDA) to bring voice-generative AI to the edge without cloud connectivity. He said the company will likely demo this at the CES 2025. 

SoundHound AI is witnessing a far more severe decline than the broader market, which is seen pausing ahead of Wednesday’s Federal Reserve rate decision. Some of the weakness may be due to profit-taking after the recent run-up.

SOUN sentiment and message volume December 17, 2024, as of 1:07 pm ET | Source: Stocktwits

On Stocktwits, sentiment toward SoundHound AI stock improved to ‘extremely bullish’ (75/100) from a ‘bullish’ mood that prevailed a day ago. Retail chatter grew louder, as reflected by the increase in message volume to ‘high.’

A Stocktwits user, who is bullish on the stock, saw the pullback as a ‘healthy’ price action. Another blamed the shorts for the weakness. The short percentage of the outstanding shares is an elevated 22.08%.

At last check, SoundHound AI was down 6.93% at $18.33 on above-average volume. 

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