SoundHound AI: Navigating Challenges and Opportunities in the Voice AI Market

SoundHound AI Stock Is Down 60% From Its All-Time High. Can This Brilliant AI Stock Provide Supercharged Returns?

SoundHound AI (SOUN -2.74%) was one of the best-performing stocks in 2024, rising 836%. At its peak, the stock was up a jaw-dropping 1,040% -- but that was last year. Since peaking in December, SoundHound AI has sold off incredibly quickly and now sits around 60% off its all-time high. T That's a tough pill to swallow for anyone who bought at the top, but is this a buying opportunity for those who missed the initial run-up? SoundHound AI is a global company SoundHound AI is clearly an artificial intelligence company, but what sets it apart from other AI investments? SoundHound AI is focused on audio inputs for AI models rather than text inputs. Think of all the situations in which speaking is needed rather than being able to type on a keyboard, and it becomes quite clear that there is a huge opportunity for SoundHound AI's software to be implemented. SoundHound's biggest industries right now are restaurants and automotive, as its software is being widely used to automate drive-thru experiences and as a digital assistant in cars. While some domestic restaurants have deployed SoundHound's software (like Jersey Mike's and White Castle), it hasn't made its way into digital assistants in the U.S. However, with some foreign automakers (like Stellantis) already implementing it overseas, it's only a matter of time before that capability is integrated into U.S. vehicles. SoundHound's growth case is extremely wide, and it's growing like a weed. In Q4, revenue rose 101% year over year to $34.5 million. For the full year, its revenue was up 85% to $84.7 million, and that growth is expected to accelerate in 2025. For 2025, management expects revenue between $157 million and $177 million, indicating that revenue is projected to nearly double. With that much strength ahead, SoundHound doesn't seem like a stock that should be down 60% from its highs, so is this a golden buying opportunity? SoundHound's stock price in years of strong growth SoundHound's stock crashed back to Earth because of inflated expectations. At its peak, it traded for more than 100 times sales, which is a difficult valuation to justify. Now, it's down to 41 times sales, which is still quite expensive. A more typical software company valuation is between 10 and 20 times sales, but then again, most software companies don't double their revenue year over year. SOUN PS Ratio data by YCharts If SoundHound doubles its revenue in 2025, it will return to that 20-ish times sales range, placing it on the higher average spectrum of software company valuations. But if SoundHound can provide another year of monster growth in 2026, then today's price starts to look more attractive. While SoundHound doesn't offer revenue guidance two years out, it does provide investors with another important metric: bookings backlog. This gives investors a measure of how much value remains on the contracts it has signed, which isn't a perfect metric. These contracts can be terminated at any time, so they aren't guaranteed revenue. However, they are a good guiding light for understanding where the company is. After Q4, SoundHound AI's bookings backlog was $1.2 billion, up 75% year over year. Considering that SoundHound is expected to convert about $167 million of that backlog into revenue during 2025, that means over $1 billion will be recognized over the next "several" years, according to management. That's huge potential growth, not to mention all the new customers that will be acquired throughout 2025 and 2026. I think SoundHound AI stock could be bought here if you believe that the growth will stay rapid past 2025. If it doesn't, the stock could get sold off even further. But if it continues to grow like it is, SoundHound AI stock could provide investors with fantastic returns.

Could Nvidia Become SoundHound AI's Biggest Competitor? | The Motley Fool

Voice artificial intelligence (AI) company SoundHound AI (SOUN -1.26%) got a big boost to its share price early last year after chipmaker Nvidia (NVDA -0.66%) disclosed that it had a small position in it. As 2024 progressed, additional good news about the business pushed its share price higher. But early this year, AI sector headwinds, competitive threats, and a tepid showing at CES set the stock on a downslope. Then in late February, when Nvidia filed its latest 13F with the SEC, investors learned that it had sold off its entire stake in SoundHound AI in the fourth quarter. Shares plunged further. Even more concerning, Nvidia recently locked up a deal with its first restaurant company. Not only is the GPU leader no longer a key backer of SoundHound AI, it may also potentially become the smaller company's biggest competitor. On March 18, Yum! Brands announced that it would be working with chip giant Nvidia in what it called an "industry-first collaboration" with the tech company. Yum! Brands owns the KFC, Taco Bell, and Pizza Hut chains, giving it a massive footprint with more than 61,000 restaurant locations throughout the world. The company is going to use AI to help assess the performance of its restaurants and is deploying voice AI systems to handle orders at drive-thrus, which is one of the areas that SoundHound has also been eyeing as a big growth opportunity. In December, SoundHound announced deals for its voice AI ordering platform with Church's Texas Chicken and Torchy's Tacos. Nvidia's deal with Yum! Brands marks the first time the tech giant partnered with a restaurant company on AI, and it could just be the start. For SoundHound, the big question was always about how much growth it could truly achieve. The competitive threat from Nvidia is far from the only concern on that front, as other companies also offer similar voice AI services. But because of Nvidia's massive scale, it could take significant market share in voice AI. It's also in a financial position to push hard into fresh markets: It generated $73 billion in profit over the past four quarters. By contrast, SoundHound is nowhere near breaking even -- it incurred a loss of more than $351 million last year. While SoundHound doubled its revenue during the last three months of 2024, that was with the help of an acquisition. For it to grow organically at a high rate won't be easy. There's loads of competition out there in its niche, and with a behemoth like Nvidia potentially en route to becoming a huge rival, investors may want to think twice about just how highly they are valuing the stock. SoundHound stock is down nearly 50% in 2025. But with a market cap of around $4 billion, SoundHound is still trading at a high valuation with respect to its top and bottom lines. It isn't profitable, and investors are paying a price-to-sales multiple of nearly 40, based on last year's sales. Even if the company hits the high end of its revenue guidance range for this year ($177 million), it's still trading at 23 times forward sales. That's a high multiple to pay for a tech company that is facing a lot of risk and uncertainty ahead. Now may be a good time for shareholders in SoundHound to reconsider their positions. While the stock has already retreated far from the peak it touched a few months ago, its free fall may not be over just yet. There are much better AI stocks to own than SoundHound -- simply going with Nvidia may be a better option. Although it may be tempting to go with a much smaller company in SoundHound that may possess a lot more upside in the long run, doing so also comes with far greater risk.

Could Investing $10,000 in SoundHound AI Stock Make You a Millionaire? | The Motley Fool

SoundHound AI (SOUN -1.26%) has been an incredibly popular AI investment pick over the past year. It first gained fame when it was revealed that AI giant Nvidia purchased a stake. Since the start of 2024, the stock has risen more than 350%, but it was up more than 1,000% in December. Part of this downfall occurred because Nvidia sold its entire stake in SoundHound AI, although the broader AI sell-off also harmed the stock. Although SoundHound AI has been hit rather hard by sell-offs, it could still be a successful investment if it continues its growth trajectory. But is it enough to turn $10,000 into $1 million? Let's take a look. For an investment to turn $10,000 into $1 million, it must increase in value by 100 times. This isn't a common occurrence, but it has happened multiple times in the stock market, most of the time right under an investor's nose. SoundHound AI has a market cap of $3.9 billion, so it would need to be an almost $400 billion company in order to make you a millionaire from a $10,000 investment. That's a tall task, as some examples of $400 billion companies include giants like Netflix, Costco, and Procter & Gamble. Even some of the largest software companies like Salesforce ($268 billion) and Adobe ($169 billion) haven't reached that threshold yet. So, SoundHound likely won't turn $10,000 into $1 million anytime soon, but that doesn't mean it can't be a successful investment. SoundHound AI is an AI company (that should be pretty obvious from its name), but instead of focusing on text input into AI models, it focuses on audio inputs. Most of the generative AI models used today don't have the option for an audio input, which is a problem when no keyboard can be used, like in a drive-thru or while driving. This is where having top-tier audio recognition software is critical, and SoundHound AI provides that to its clients. This caused SoundHound's revenue to rapidly grow, increasing by 101% to $34.5 million in Q4. That growth is expected to persist throughout 2025, with management guiding for $157 million to $177 million in revenue, which indicates 97% growth at the midpoint. That's an impressive growth rate, but SoundHound will need to continue that growth for multiple years to even come closer to becoming a 100-bagger. One metric management provides to investors to give them insights into future growth is revenue backlog, which measures the remaining value of the contracts it has signed. At the end of Q4, this figure stood at $1.2 billion. Even if you subtract out the 2025 revenue prediction, that leaves over $1 billion in remaining contract value, which indicates that SoundHound will likely see this explosive growth continue for a few years. However, with how the stock is valued, it needs that rapid growth. Just because SoundHound's stock is down by 60% from its all-time high doesn't mean it is cheap. The stock still trades for an expensive 39 times sales, which is higher than the usual 10 to 20 times sales software companies usually trade around. However, most software companies aren't doubling their revenue year over year, and if SoundHound doubles its revenue this year, as management predicts, this premium will be reduced to around 20 times sales. So, what can investors expect from SoundHound's stock? I think it all boils down to what the company does from 2026 to 2030. I think the 2025 growth is already baked into the stock price, but if SoundHound can deliver another year of revenue doubling in 2026, then the stock price could easily double in response, and the same goes for any year beyond that. That's not enough to turn $10,000 into $1 million, but it is enough to be a successful investment and boost your portfolio returns. As a result, I think it's OK to take a swing at SoundHound's stock at these prices but keep the position size fairly small because there is plenty of risk in the investment.

Where Will SoundHound AI Stock Be in 3 Years? | The Motley Fool

Specific patterns often repeat in the stock market. For example, small, unprofitable companies that surge based on hype tend to give back their gains quickly. SoundHound AI (SOUN -8.09%) is a great example. Shares of the audio-focused AI start-up boomed after tech giant Nvidia revealed that it had taken a small position in it. But since then, they've fallen back down to earth. At the time of this writing, SoundHound shares are now down by a whopping 61% from the all-time high of $24.98 they reached late last year. Should investors see this dip as a buying opportunity or stay far away from the stock? And what might the next three years bring for the company? Nvidia's involvement with SoundHound started in 2017 when the chipmaker participated in a $75 million funding round alongside other tech companies like Samsung. In February 2024, an SEC filing revealed that Nvidia held around 1.73 million SoundHound shares, which is 0.5% of the total outstanding. However, by February 2025, another SEC filing revealed that Nvidia had dropped its entire position in SoundHound, which may have deflated market optimism in the company. Nvidia's exit suggests that the chipmaker didn't have any long-term plans for SoundHound (such as an acquisition) and may not see significant upside potential in the equity relative to other places where it could be keeping its money. That said, investors shouldn't look too deeply into the situation. As an AI chip manufacturer, Nvidia benefits from keeping the AI software industry healthy and vibrant. Its investment in SoundHound may have been a way to support companies pioneering new use cases for its hardware. Nvidia's investment in SoundHound may have distracted investors from focusing on the company's actual fundamentals. They are a mixed bag. Fourth-quarter revenue grew by 101% year over year to $34.5 million. But while this sounds impressive, the devil is in the details. SoundHound closed several significant acquisitions in 2024. These include enterprise AI software company Amelia (purchased for $80 million) and online food platform Allset. These new businesses added significant non-organic growth that won't be replicated in future quarters. Furthermore, they have dramatically expanded the company's cash burn. The fourth quarter's gross margin fell from 77.2% to 39.9%, while operating losses ballooned by 1,974% from $12.4 million to $257 million. Over the long term, SoundHound wants to turn all these disparate AI-related businesses into a coherent voice AI ecosystem. For example, the Allset acquisition likely plays a role in its recent development of an in-vehicle voice assistant designed to allow users to find restaurants and order takeout directly from their car's infotainment system without needing a third-party app like Uber Eats or DoorDash. The company has also secured a slew of partnerships in the restaurant industry, where it claims to be working with 30% of the top quick-service brands, helping automate their drive-thru systems in select locations. However, it is unclear if these companies are experimenting with SoundHound's software or if they really plan widespread implementation. SoundHound wants to synergize voice recognition with generative AI, which holds the potential to create significant value. But right now, clients are still experimenting with the technology and probably aren't ready to fully embrace it for restaurant drive-thrus and other real-world use cases. While voice AI will become more mainstream over the next three years, SoundHound's stock will likely still face significant downside because of the company's massive operational losses and risky-acquisition-reliant growth strategy. Investors should stay far away until losses stabilize and the business establishes a pathway to profitability.

Where Will SoundHound AI Stock Be in 1 Year?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy. Travis Hoium is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

SoundHound AI Has Been My Favorite Artificial Intelligence Stock in 2025. Here's Why I'm Not Changing Course in the Sell-Off. | The Motley Fool

SoundHound AI has weathered some wild price swings lately. Here's why this voice AI specialist deserves your consideration again. I have bought more SoundHound AI (SOUN -8.09%) stock this year than any other artificial intelligence (AI) stock. The recent sell-off in pricey tech stocks won't make me stop. In fact, I wouldn't have bought any SoundHound AI shares at all if they hadn't taken a plunge first. Let me explain. SoundHound AI is not a new company. It has been around since before smartphones were a thing, starting out with apps identifying songs by sound clips. More specifically, it developed AI tools that could detect fingerprint-like patterns in audio recordings, and the machine learning algorithm worked particularly well with hummed versions of the melody. CEO and co-founder Keyvan Mohajer was satisfied with this role for many years, happy to run SoundHound (née Midomi) as a small, specialized service with minimal business ambitions. But then SoundHound AI started finding other applications for its AI-driven audio decoding software, and the ambitions blossomed. SoundHound released the general-purpose Houndify system in 2016 and started to sign contracts. Five years later, it had secured deals with several global automakers and a couple of entertainment technology specialists. Then it was time to hit the stock market with an initial public offering (IPO) and the addition of "AI" to the company name. More car companies signed up, alongside a whole new class of restaurant chains -- automated voice controls are helpful at the drive-through window. Since then, SoundHound AI has added many more clients including a close partnership with restaurant management specialist Toast (TOST -1.16%). Dodge and Chrysler parent Stellantis (STLA -3.55%) is taking the next step, rolling out SoundHound AI controls with new cars sold in Europe and Japan. American versions should follow, perhaps in 2025 or 2026. This little AI expert is going places. The company finished 2024 with a backlog of $1.2 billion in unfilled orders (mostly based on long-term contracts that will generate revenues over several years). That's up 75% from the year-ago period. So there are plenty of reasons to love SoundHound AI as a company and technology developer. The stock, on the other hand, was way too expensive last fall. The stock price soared from $1.70 to $8.00 per share in the spring, boosted by a small investment from AI giant Nvidia (NVDA -5.59%). That artificial price boost faded out over the summer, and it made sense to buy the stock again. But then the meme stock community got a hold of SoundHound AI, inspired by its Nvidia connection and a large cohort of short-sellers. About 25% of its shares were on loan to bearish investors in November, setting the stage for an attempted short squeeze. The idea is simple. Find a heavily shorted stock, where many pessimistic investors raked in quick funds in return for a bearish bet on the stock. For thinly traded names, an organized social media campaign can move the stock higher in a hurry. If the underlying share price rises too high, some of the negative investors will have to close their shorting positions as the stock brokerage issues a "call to cover." These forced sales then push the stock price even higher, resulting in more calls to cover, and the cycle continues. Ideally, all the shorts would buy back their borrowed shares at ridiculously inflated prices, making lots of money for bullish investors. But it didn't really work out that way. SoundHound AI's stock price rose all the way to $24.23 in late December but the short sellers didn't go away. The most recent data update on March 14 showed 116.6 million SoundHound AI shares on loan to the shorters. That's 33% of the publicly traded float. As of March 25, SoundHound AI's stock was down 49.4% year-to-date. Priced at $10.20 per share, the stock is floating well above the Nvidia-inspired jump from a year ago, but I can finally buy and recommend the stock again with a straight face. It's been another year of robust business development, and I don't mind this price level anymore. The short-squeeze attack appears to be over, leaving just some bad memories and an exaggerated number of short-sale investments in its wake. This is still a great company, and I'd rather pay a small premium for the stock than be left empty-handed in the long run. I just couldn't stomach the excessive price manipulation SoundHound AI experienced in December, and I'm glad it's over. So if you're looking for a very practical implementation of AI concepts, aimed at several lucrative markets, SoundHound AI could be the best AI stock to buy right now. It's certainly on my short list of top ideas, anyway.

Better Artificial Intelligence Stock: SoundHound AI vs. C3.ai | The Motley Fool

Advances in artificial intelligence (AI) are rapidly reshaping the global economy through a transformative impact on business productivity. SoundHound AI (SOUN -5.28%) and C3.ai (AI -2.17%) are two small-cap companies poised to turn their unique AI-powered applications into significant long-term growth opportunities. Even with both stocks selling off sharply at the start of 2025, their positive outlook suggests these AI disrupters are ready to rebound. Let's explore which of these two AI stocks could be a better addition to your portfolio. If you have ever interacted with an automobile's voice-enabled infotainment system or placed a meal order with a restaurant drive-thru virtual assistant, there's a good chance you have already come across SoundHound AI's voice solutions. The company has emerged as a leader in conversational AI, seen as a more natural method of engaging with technology compared to text-based inputs. For the year ended Dec. 31, 2024, total revenue reached $84.7 million, up a spectacular 85% year over year. Management cited strong demand with a cumulative subscriptions and bookings backlog of $1.2 billion, representing a runway for business it expects to realize in the next few years. For 2025, the company is targeting full-year revenue between $157 million and $177 million, an annual increase of 97% at the midpoint. While not currently profitable, SoundHound AI expects to achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of this year. In many ways, the best is yet to come for SoundHound AI, especially considering its early momentum in expanding its portfolio of solutions. The company's agentic AI customer service and employee experience applications could prove to be game changers. An ecosystem of AI agents can respond to complex inquiries, autonomously performing tasks with practical uses that could potentially replace the need for human-operated call centers. Investors who believe SoundHound AI will consolidate its lead in these high-growth areas of voice-driven, agentic AI have plenty of reasons to buy the stock and hold it for the long run. C3.ai doesn't quite have the same flashy consumer-focused voice interface as SoundHound AI, yet the company is making some major moves in the field of enterprise AI. Through the company's C3 AI platform, customers can develop, deploy, and operate custom AI-powered applications via an intuitive low-code architecture. The company also offers industry-specific AI programs with generative AI capabilities, empowering businesses with data-driven analysis. The attraction of C3.ai as a possible investment lies precisely in this commercial traction, with an impressive list of major corporations and government agencies as current customers. In November 2024, C3.ai announced a strategic alliance with Microsoft to feature its portfolio of products on the Azure cloud ecosystem as a preferred vendor, contributing to a surge in business. For the last reported fiscal third quarter (for the period ended Jan. 31), total revenue of $99 million climbed by 26% year over year, even accelerating from the 18% growth rate in the prior-year quarter. For the full year, C3.ai is targeting revenue growth of 24% to 27% with a narrowing financial loss. Compared to SoundHound AI, C3.ai is the larger company in terms of total revenue, yet commands a lower market capitalization of $3.1 billion compared to SoundHound AI at $4.1 billion. That difference is evident in each stock's forward price-to-sales ratio (P/S), where C3.ai stands out as a relative bargain at a forward P/S of 8 compared to SoundHound AI at 25. The case for C3.ai being the AI stock to buy is centered around a view that the company is undervalued with its proven technology on track to deliver long-term growth. I'm bullish on SoundHound AI and C3.ai, viewing both stocks as compelling buy-the-dip opportunities. If forced to choose just one as the better AI stock right now, I believe SoundHound AI will outperform due to its stronger growth outlook and differentiated voice-AI offering. For investors with a long-term time horizon, it's a great option for tech sector exposure within a diversified portfolio.

SoundHound AI: A Great Story, But Not The Right Sound For Me (NASDAQ:SOUN)

Looking for a helping hand in the market? Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Learn More " Investment Thesis SoundHound AI, Inc. (NASDAQ:SOUN) has a very compelling story, of how it allows users to use their voice as commands together with AI, with the goal of taking market share in this rapidly growing sector. Strong Investment Potential My Marketplace highlights a portfolio of undervalued investment opportunities - stocks with rapid growth potential, driven by top quality management, while these stocks are cheaply valued. I follow countless companies and select for you the most attractive investments. I do all the work of picking the most attractive stocks. Investing Made EASY As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Deep Value Returns' Marketplace continues to rapidly grow.Check out members' reviews.High-quality, actionable insightful stock picks.The place where value is everything. Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year. With a focus on tech and "the Great Energy Transition (including uranium)", Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outstanding professional experience in tech and energy and a following of over 40K on Seeking Alpha. Michael is the leader of the investing group Deep Value Returns Features of the group include: Insights through his concentrated portfolio of value stocks, timely updates on stock picks, a weekly webinar for live advice, and "hand-holding" as-needed for new and experienced investors alike. Deep Value Returns also has an active, vibrant, and kind community easily accessible via chat. Learn more Seeking FCF is an associate of Michael Wiggins De Oliveira Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.