Shares of SoundHound AI (NASDAQ: SOUN) jumped as much as 24.2% in trading on Wednesday after the company announced a major integration with Stellantis brands. Models will be built with the SoundHound Chat AI voice assistant built in, and some capabilities will even be compatible with previously released models.
Shares held most of their gains and are up 22.2% in trading as of 3 p.m. ET.
A previous announcement in March 2024 laid the groundwork for Stellantis to get SoundHound capabilities. However, this was an official announcement that Peugeot, Opel, and Vauxhall vehicles in 11 European markets will get SoundHound Chat AI starting today.
The next step will be rolling out the features to 17 markets and 12 languages by the end of the month. SoundHound Chat AI’s capabilities are fairly simple but could be an incremental value add for automakers.
After today’s pop, SoundHound AI has a market cap of $1.7 billion on just over $50 million in revenue and nearly double that in losses. Stellantis may help the financials, but whether the business model is sustainable is unclear.
SOUN Revenue (TTM) data by YCharts. TTM = trailing 12 months.
That long-term focus doesn’t matter much today, though, as investors continue to bid up any company with an AI story. SoundHound is today’s beneficiary.
I’m more interested in seeing what the impact will be on SoundHound’s financials over the next few quarters. If margins and net losses don’t improve, the business doesn’t appear to be on a stable path.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
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