SoundHound AI (SOUN -5.17%) stock has experienced a significant decline in 2025, plummeting 44% as of this writing. Several factors have contributed to this downturn, including Nvidia’s exit from its stake in the voice AI solutions provider earlier this year, the broader correction in technology stocks due to tariff-related turmoil, and the company’s recent first-quarter earnings report. Despite reporting a substantial revenue increase and reducing its adjusted loss, SoundHound slightly missed Wall Street’s top-line estimates, triggering investor panic.
A Compelling Opportunity in Conversational AI
However, this decline may present a buying opportunity, as the growing demand for conversational AI solutions could help SoundHound regain its momentum and surge higher over the next three years. The conversational AI market, currently valued at $11 billion, is expected to grow at a compound annual growth rate (CAGR) of nearly 24% through the end of the decade, driven by the adoption of voice AI in customer support services and consumer applications across various industries.
SoundHound AI is outpacing this growth, with its Q1 2025 revenue surging 151% year-over-year to $29.1 million. Although this was slightly below the $30.4 million consensus estimate, management attributed the shortfall to a $2 million revenue transition from one of its customers, which is expected to be recognized later in the year. SoundHound has reaffirmed its full-year guidance, with revenue projected to nearly double in 2025, indicating confidence in its ability to outpace the broader market’s growth.
Sustainable Growth Drivers
SoundHound’s customer base is expanding across various verticals, including restaurants, healthcare, automotive, and telecom. The company is also exploring emerging niches such as voice commerce and AI agents within the conversational AI market. Voice commerce, in particular, is expected to almost triple in size over the next five years, with multiple restaurants and automakers already integrating or testing SoundHound’s voice commerce solutions.
Moreover, SoundHound is venturing into the agentic AI market with a new platform that enables customers to build and deploy voice-enabled AI agents capable of understanding, reasoning, and acting with an intimate knowledge of their enterprise. This platform can tackle complex customer queries without human intervention, improving customer service operations efficiency. The voice AI agent market is projected to grow from $2.4 billion to over $47 billion by 2034, providing a significant long-term growth opportunity for SoundHound.
Upside Potential
Assuming SoundHound’s revenue grows by 50% in both 2026 and 2027, its annual revenue could reach $375 million after three years. Even if the stock trades at half its current sales multiple, its market cap could hit $7.5 billion, representing a potential upside of 70% over the next three years. Given SoundHound’s growth prospects and expanding market opportunities, growth investors may consider accumulating this AI stock following its recent decline.
