A key mover investors are focusing on in today’s market is SoundHound AI (NASDAQ:SOUN). Shares of SOUN stock have rallied about 10% in afternoon trading on little news. However, investors are noticing that certain artificial intelligence (AI) related stocks are also seeing improvement today, as investor sentiment appears to be taking a more bullish tone.
Last week’s selloff in SoundHound, and many similar companies with an AI focus, was brutal. Trading around the $4 per share level for most of last week, shares of SOUN stock ended the week around the $3.50 level. Today’s rally above the key $4 level suggests traders and investors are adjusting their positioning accordingly.
Other AI stocks, including Nvidia (NASDAQ:NVDA) and Super Micro (NASDAQ:SMCI), are seeing similar moves. They’ve all been hit by selloffs, which continued through the end of trading yesterday.
Let’s dive into this move and see what we can make of today’s price action.
SOUN Stock Surges on Sentiment Shift
This year’s rally in SOUN stock has truly been incredible, with shares moving from around $2 to start the year to more than $10 per share at the company’s March peak. So, there’s plenty of valuation contraction that’s already materialized in this case.
Investors have clearly spent the past few weeks attempting to digest the actual fundamental impact surging AI demand will have on companies like SoundHound. Indeed, as a key provider of voice AI services to a range of clients, this stock is about as pure play as they come in this space. In that regard, the rally investors saw earlier this year can be explained by the moves seen in many other pure-play AI stocks, such as Nvidia and Super Micro.
Each of these companies is still unique in its products and services and the markets it serves. SoundHound is certainly among the more speculative names in the sector, with a growth profile that’s much more uncertain than that of its peers. That’s not to take anything away from today’s impressive rally; it’s just an observation.
I have no idea if this rally will continue, but it does appear broader sentiment about this sector is becoming more constructive. I wouldn’t be surprised to see traders and momentum investors step back into this name, making SOUN stock one to watch in the coming weeks.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
