Shares of SoundHound AI (NASDAQ:SOUN) experienced a 2% decline in early trading on Thursday, despite an upgrade from Cantor Fitzgerald, a notable move in the AI voice and speech recognition sector.
Cantor Fitzgerald’s Upgrade
Analyst Brett Knoblauch highlighted the recent sell-off, leading to a more justifiable valuation for SoundHound AI. He upgraded the company’s rating to Neutral from Underweight while maintaining a price target of $4.90. Knoblauch acknowledged the elevated valuation relative to the broader software market but suggested that both downside and upside risks are now more balanced.
Potential Catalysts for Growth
Knoblauch outlined several factors that could drive SoundHound AI’s stock higher, including changes in Nvidia’s holdings, accelerated business fundamentals, and improved transparency. However, he cautioned against potential negative impacts from diminishing retail investor interest and ongoing pressure on the earnings multiple.
Market Sentiment
Analysts’ opinions on SoundHound AI (NASDAQ:SOUN) vary, with Seeking Alpha authors assigning a HOLD rating, while Wall Street analysts lean towards a BUY recommendation. Additionally, Seeking Alpha’s quant system, known for its market-beating performance, rates SOUN as a HOLD.
Conclusion
Despite Cantor Fitzgerald’s upgrade and the identified growth levers, SoundHound AI faces challenges amidst market volatility and shifting investor sentiment. While the company holds promise in the AI sector, continued vigilance and strategic adjustments may be necessary to navigate the evolving landscape and realize its full potential.
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