Why SoundHound AI Stock Is Soaring Today

SoundHound AI (NASDAQ: SOUN) stock is posting another day of big gains Monday. The artificial intelligence (AI) software specialist's share price was up 9.5% as of 3:20 p.m. ET. At the same point in the session, the S&P 500 and the Nasdaq Composite were each up 0.3%. The stock had been up as much as 11.2% earlier today.

While there doesn't appear to be any major new business-specific news for SoundHound AI, the company's valuation is getting a lift from excitement surrounding AI plays and bullish momentum for the broader market. Both the S&P 500 and the Nasdaq Composite have hit new record levels today, and artificial intelligence investments are playing a big role in the gains.

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SoundHound AI stock surges on broader artificial intelligence rally

After some sell-offs and volatility earlier in the year, the AI trade appears to be back on -- and many top players in the space have recently hit new valuation highs. SoundHound AI continues to trade at a substantial discount compared to its valuation peak, but its share price is climbing amid bullish momentum for the broader market and renewed excitement surrounding AI-related growth opportunities.

What's next for SoundHound AI?

With a market capitalization of roughly $4.3 billion, SoundHound AI is valued at approximately 27 times this year's expected sales. As of this writing, SoundHound AI stock has risen roughly 173% over the last year. On the other hand, the company's share price is still down roughly 56% from its valuation peak.

With its last quarterly report, revenue grew 151% year over year to reach $29.1 million. While the company's sales base is still relatively low, its revenue growth has actually been accelerating. Demand for the company's technologies appears to be quite strong and could support a continued rally for the stock.

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.