Why did SOUN stock soar

In a report released this morning, the Ministry of Commerce estimated the gross domestic product (GDP) for the second quarter to increase at an annual rate of 2.8%. Meanwhile, according to economists' average forecasts, the growth rate for the same quarter was 1.9%. This report was good news for Soundhound in many ways.

An economic “soft landing” would be great for Soundhound AI stocks

Recent GDP data suggests that the US economy may be heading towards a “soft landing” that the Federal Reserve (Fed) and other fiscal policy departments/agencies/ have been trying to create. Recent data suggests there is no need to go into recession to curb inflation. There is still a possibility that the Fed will cut interest rates in September, and overall economic strength is higher than expected. This is good news for companies with valuations that are highly dependent on growth, including Soundhound AI.

Sound Hound has yet to record profit, and is currently trading at about 22.6 times the expected sales for this year. In such a valuations profile with a high degree of dependence on growth, there is a high possibility that macroeconomic trends will have a significant impact on the short-term performance of stock prices.

Strong private consumption could support Soundhound's growth

As well as suggesting a more favorable valuation background, the GDP report may be flashing positive signals for SoundHound's business. The reason economic data for the second quarter exceeded expectations was mainly due to private consumption.

In that respect, most of Soundhound's customers are in the food service industry. This software specialist company is also focusing on the automotive industry through a partnership with Stellantis. Strong consumer markets may encourage SoundHound's key customers to continue spending on growth initiatives and help software specialists exceed sales expectations.