This has turned out to be a remarkable year for SoundHound AI (NASDAQ: SOUN) investors as shares of the artificial intelligence (AI) voice solutions company have shot up a remarkable 272% as of this writing.

The stock’s stunning rally, however, has not been entirely driven by its impressive financial performance. SoundHound shot up early in the year after it emerged that AI pioneer Nvidia had taken on a small stake in the company. And it is also worth noting the stock has witnessed huge swings throughout the year.

Investors, therefore, may be wondering if this high-flying AI stock can sustain its red-hot momentum in 2025 as well. Let’s take a look at recent developments at SoundHound and try to predict how the stock may perform over the next 12 months.

SoundHound AI seems set for another year of terrific growth

The demand for SoundHound’s voice AI solutions has been increasing at a healthy pace — revenue in the first nine months of 2024 increased 74% year over year to just over $50 million. Management is guiding for full-year revenue of $82 million to $85 million.

Assuming SoundHound does hit the midpoint of its guidance, its top-line growth for the year would reach 82%, up significantly from the 47% growth it delivered in 2023. What’s more, the company believes it will become profitable on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis by the end of 2025. For context, it posted an adjusted EBITDA loss of $15.9 million in Q3 2024.

SoundHound’s eye-popping growth can be attributed to the rapid adoption of its voice AI offerings. It offers several voice-based AI solutions to customers, including automatic speech recognition, natural language understanding, and text-to-speech, among others. The company has already built a solid customer base across multiple industry verticals such as automotive, restaurants, the Internet of Things (IoT), and smart devices.

For example, the likes of Hyundai, Stellantis, Honda, and Kia are using SoundHound’s voice AI technology in their cars, while Qualcomm and Motorola are deploying its tech in smartphones. Restaurant chains use SoundHound’s solutions for online ordering and customer service.

And now, with the recent acquisition of enterprise AI software provider Amelia, SoundHound is expanding its presence in the customer service space, where the demand for voice-based AI solutions is increasing at a nice clip. It is stimated the adoption of AI in this space could grow at a nearly 24% annual pace over the next five years, generating annual revenue of $1.38 billion at the end of the forecast period.

SoundHound is doing the right thing by bolstering its customer service offerings through Amelia, which should increase its reach in additional markets such as financial services, healthcare, insurance, and retail. SoundHound paid $80 million for Amelia and expects to generate $45 million in recurring revenue from this acquisition next year.

With this acquisition, the company believes it will generate $155 million to $175 million of revenue next year. That would nearly double its outlook for this year, meaning growth may continue to accelerate in 2025.

Is more upside possible in the next year?

Though management has an incredibly bullish outlook, the six analysts covering SoundHound stock have given it a median 12-month price target of $8.50, according to CNN. That represents a gain of just 8% from where the stock trades as of this writing.

One reason the median price target doesn’t show a lot of upside in 2025 is because SoundHound is trading at an expensive 36 times sales. That rich valuation indicates the market has already priced in the outstanding growth the company is delivering.

If anything, SoundHound will have to outperform the market’s expectations in the coming year for it to justify its sky-high sales multiple. Only then will the stock be able to deliver any meaningful upside in the coming year. Following the outstanding gains it has clocked so far in 2024, SoundHound AI only seems suitable for those with a higher appetite for risk or ideally, a long-term investing horizon.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Qualcomm. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.