Why SoundHound AI Stock Blasted as Much as 75% Higher This Week

Shares of SoundHound AI (SOUN -9.60%) charged sharply higher this week, soaring as much as 74.9%, according to data supplied by S&P Global Market Intelligence. As of 1:02 p.m. ET on Thursday, the stock was still up 34%.

The springboard that sent the artificial intelligence (AI) specialist soaring was robust results from another company in the AI space.

Evidence for the AI gold rush 

While Oracle (ORCL 0.07%) is widely known for robust database management systems and cloud services, the company is quickly becoming a force to be reckoned with in the field of AI. That was on full display when Oracle reported its results. For its fiscal 2024 third quarter (ended Feb. 29), the company generated revenue of $13.3 billion, up 7% year over year, delivering adjusted earnings per share (EPS) of $1.41, up 16%.

It was Oracle’s cloud segment that raised eyebrows. Overall, cloud revenue of $5.1 billion climbed 25% year over year, but its cloud infrastructure offering surged 52%. This far outpaced the results of Amazon Web Services (AWS), Alphabet‘s Google Cloud, and Microsoft, which grew 13%, 26%, and 30%, respectively.

Oracle CEO Safra Catz noted that demand for its AI cloud services “substantially exceeds supply,” so Oracle is ramping up the expansion of existing data centers and adding new ones to meet demand. The company also cited a deal with Nvidia and suggested a big announcement at its upcoming GPU Technology Conference (GTC) next week.

What does this have to do with SoundHound AI?

In a word: Nothing. However, these developments provide insight into the broader adoption of AI. Some market commentators have wondered if the ongoing demand for AI would continue. This seems to answer that question with a resounding yes.

That said, investors should approach the stock with caution. Since last month, when it came to light that Nvidia owned a stake in SoundHound AI, the stock has more than doubled. It now trades for 24 times forward sales, despite a lack of profits.

For those still interested in SoundHound AI, investors should size their holdings appropriately.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.