Shares of Soundhound AI (SOUN), a company specializing in voice-AI technology, jumped over 5% on Wednesday, positioning the stock as one of the top 10 trending tickers on Stocktwits.
Retail sentiment for Soundhound surged to ‘extremely bullish’ (77/100), driven by a spike in message volume as investors braced for the Federal Reserve’s highly awaited rate decision later in the day.
The market widely expects the Fed to deliver its first interest-rate cut in four years, likely trimming rates by a quarter point.
For small-cap stocks like Soundhound, a rate cut could be a major catalyst. Small caps, often reliant on external financing, stand to benefit more from lower rates compared to their large-cap counterparts, which can typically fund operations through cash flow.
These expectations have already boosted the Russell 2000 index, which has outperformed the S&P 500 over the past five days, rising more than 4% against the S&P’s 1.5% gain.
Soundhound’s stock, which has more than doubled in 2024, owes its momentum to strong topline performance and upbeat outlook following its second-quarter earnings report in August.
While net losses widened to $37.3 million from $23.3 million a year earlier, revenue soared 54% to $13.46 million, surpassing expectations. The company credited this to “strong customer momentum across all of our key industries.”
In addition to its earnings, Soundhound announced an $80 million acquisition of Amelia, an enterprise AI software company.
Soundhound now sees upwards of $80 million in revenue for this year, factoring in the acquisition, with expectations of reaching $150 million in 2025.
The company has already secured deals with major quick-service restaurant chains, including White Castle, Jersey Mike’s, Five Guys, Noodles & Company, and Chipotle Mexican Grill.
Retail investors are speculating that McDonald’s and Taco Bell could soon join Soundhound’s client roster, which has stoked even more optimism.
Technically, Soundhound stock has been showing strength, rebounding from its trendline support and forming higher lows. However, the stock now faces a key resistance level near $6, which could determine its next move.
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