SoundHound AI's (SOUN) Q3 was another positive step for the company's long-term growth story amid rising competition and a challenging economy, Wedbush Securities said in a note Friday.

Analysts, including Daniel Ives, said the company's Q3 results showed modest beats on both revenue and earnings, along with a slight increase in full-year guidance. They added that SoundHound AI continues to experience strong demand for its voice AI solutions and growing momentum across all business segments.

Total revenue rose 68% year over year to $42 million, slightly above Wall Street's estimate of $40.5 million. The analysts said that growth was driven by strong performance in the company's three core areas, Internet of Things, or IoT, Enterprise, and Restaurants, through both direct and channel sales.

SoundHound also secured a major new contract in China with a leading robotics company, expanding its IoT presence and diversifying its customer base, the note added.

For 2025, SoundHound slightly raised its revenue guidance to a range of $165 million to $180 million, up from its prior outlook of $160 million to $178 million. Analysts said they view this outlook as conservative, given that the company continues to see strong demand across all business areas and improving trends in automotive and other sectors.

"Overall, we believe this was another step in the right direction for the SoundHound growth story as the company continues to build toward profitable growth with strong monetization capabilities across multiple high total addressable market industries despite increasing competition and a murky macro," the analysts said.

Wedbush maintained its outperform rating and $16 price target on the stock.

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