Anders Bylund, The Motley Fool
5 min read
In This Article:
-
I'm waiting for SoundHound AI to boost its financials or for its stock price to come down.
-
I prefer to buy Micron Technology during one of its predictable market downturns to maximize returns.
-
Being patient and waiting for the right price can pay off, even in a hot market.
The stock market has recovered from April's sudden dip. From the S&P 500 to the Nasdaq Composite, the market-defining indexes are reaching fresh all-time highs almost every day. As of June 27, those portfolios had gained 12.6% and 13.6%, respectively, over the last year.
As a result, some of the best artificial intelligence (AI) stocks are running a bit hot again. I'm keeping a close eye on SoundHound AI (NASDAQ: SOUN) and Micron Technology (NASDAQ: MU) at the moment. Their stocks look a bit pricey today, but I'm ready to pounce on them in the next market dip.
I've been a SoundHound AI fan for years, and I expect big things from this company in the long haul. Voice-control systems are gaining momentum in many different markets, from in-car controls and phone-based menu systems to drive-through windows and data center operations.
SoundHound AI has been fine-tuning its AI-based voice interpretation tools since smartphones were new and hot. These days, the company offers agentic AI, process automation, and real-time conversations. The client list includes many of your favorite consumer electronics and carmaker brands. Their long-term contracts are starting to kick in, converting SoundHound AI's billion-dollar order backlog into actual revenues.
Yet, I can't quite recommend this stock right now. SoundHound AI's shares posted artificial gains in a meme-stock moment in late 2024, and the peak prices are now long gone, but some lingering market effects remain. The stock is up 155% over the last 52 weeks, and it looked expensive at the start of that surge.
So, one of two things must happen before I smash SoundHound AI's buy button again.
-
The company could earn its lofty valuation by publishing dramatically stronger financials. Again, the beefy order backlog should generate lots of business over the next several years, but the revenue conversion process has been slow so far.
-
The stock could take another haircut. This could happen over time as the meme stock mania fades out or very quickly alongside a downturn in the broader stock market.
I don't mind waiting for SoundHound AI's business plan to gain traction. At the same time, this stock will be at the top of my list of buying ideas the next time every high-priced growth stock takes a big hit.
