Turning $10,000 into $1 million over a decade is a challenging feat that only a handful of stocks have accomplished. However, being dominant in an important emerging trend can make this possible. Currently, artificial intelligence (AI) is the biggest trend, and SoundHound AI (SOUN -3.47%) is at the center of this movement.
The Path to 100x Growth
To achieve this growth, SoundHound AI would need to become a significantly larger company. With a current valuation of $4 billion, it would need to grow into a $400 billion company. For context, companies like Netflix ($507 billion) and Oracle ($450 billion) are currently valued around that level. However, considering the market’s historical growth pattern – doubling every seven years and rising around 150% every decade – a more realistic comparison might be to companies valued around $150 billion, such as Shopify and Spotify.
SoundHound AI’s Growth Trajectory
SoundHound AI is already delivering growth above the minimum threshold required for 100x growth. The company allows users to input AI models using audio signals rather than text, which is crucial in situations like driving or ordering food. In Q1, SoundHound AI’s revenue rose 151% year over year to $29 million. To maintain a 100x growth pace over a decade, SoundHound AI needs to achieve a compound annual growth rate (CAGR) of 59%. Management expects revenue to rise by 97% in 2025, meeting the minimum growth threshold.
Challenges and Valuation
The challenge lies in maintaining this rapid growth over an extended period. SoundHound AI’s stock is currently priced at 36 times sales, which is higher than the typical software stock valuation of around 10 times sales. However, given its 150% year-over-year growth rate, the premium is justified. While it’s possible for SoundHound AI to achieve 100x growth, it’s likely not probable.
Investment Consideration
