DA Davidson analysts began covering a stock in the artificial intelligence (AI) sector that they believe is currently undervalued due to its past status as a special purpose acquisition company (SPAC). SPACs, much like initial public offerings (IPOs), are created specifically to take private companies public. However, they have recently faced skepticism due to some high-profile failures. Nonetheless, DA Davidson analysts think this former SPAC has the potential to surge by more than 200%.

DA Davidson initiated coverage on SoundHound AI (NASDAQ:SOUN), a company focused on developing a voice AI platform for creating voice-enabled experiences. They gave it a Buy rating and set a price target of $5. SoundHound AI’s closing share price was $1.60 the previous day, implying a significant upside of over 200% based on the price target. Following this initiation report, shares rose more than 7% pre-market today.

DA Davidson’s analysts believe that the market isn’t fully recognizing SoundHound’s growth prospects and view the long-term opportunities as highly attractive and available for the taking. They explained that SoundHound’s innovative and independent Voice AI platform is expected to become the industry standard for performance. With improvements in its financial model and the expansion of its sales team, the analysts believe the company is well-positioned to capture a substantial market share and sustain strong growth over the long term.

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