Why SoundHound AI Stock Rocketed Higher Again Today

SoundHound AI (NASDAQ: SOUN) stock saw another day of explosive gains in Friday's trading. The conversational-AI company's share price closed the day up about 12.5%.

While there wasn't any direct business news pushing SoundHound AI's stock higher today, the company's share price was gaining ground in conjunction with news from other corners of the artificial intelligence (AI) market. The software specialist is now up 600% across 2024's trading.

AI stocks surge on Trump AI czar announcement and ChatGPT news

Artificial intelligence stocks saw widespread bullish momentum today in conjunction with developments in the space. For starters, President-elect Donald Trump announced that he intends to appoint venture capitalist David Sacks as his administration's AI and crypto czar. The move signals that the incoming administration will likely make AI a key priority.

Yesterday, OpenAI also announced the launch of its o1 reasoning model and a $200 monthly subscription for its new ChatGPT Pro service. SoundHound AI's in-car audio software platform features ChatGPT integration, and it's likely that new feature support from the AI leader will eventually will make it to the audio software specialist's auto offerings. More broadly, OpenAI's move to price its new ChatGPT software at $200 per month has investors feeling bullish about monetization opportunities in the AI space.

What comes next for SoundHound AI stock?

Artificial intelligence has been the hot story in 2024, and no stock has been hotter than SoundHound AI. Its returns have outperformed all other big name AI stocks across the stretch, and gains have pushed the company's market capitalization to roughly $5.4 billion. Its also gotten more expensive.

SOUN PS Ratio (Forward) data by YCharts.

SoundHound AI stock is now valued at roughly 64 times this year's expected sales. While the company has been increasing its revenue at a rapid pace and still has big growth opportunities ahead, investors should understand that the company's highly growth-dependent valuation sets the stage for downside risk if growth misses expectations or macroeconomic and political conditions evolve in less favorable directions. If you're considering investing in SoundHound AI, utilizing a dollar-cost averaging approach through volatility could be the right move.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.