SoundHound AI Stock Plummets
SoundHound AI (SOUN) saw its stock price decrease significantly on Monday, retreating 8.5% during a trading session that also saw the S&P 500 (^GSPC) fall 0.5% and the Nasdaq Composite (^IXIC) decline 1.2%. The conversational artificial intelligence (AI) company’s shares experienced an even steeper drop earlier in the day, falling as much as 11.9%.
The market’s downturn was largely attributed to investors reducing their holdings in growth-dependent AI stocks. This caution stems from the upcoming fourth-quarter earnings report from Nvidia, anticipated on Wednesday, which could potentially shape the future of the AI market.
Concerns about Microsoft’s data center expansion plans also contributed to the decline, raising questions about the broader growth outlook for AI companies. These concerns, combined with Nvidia’s upcoming report and SoundHound’s own Q4 report the following day, suggest potential volatility in the stock this week.
Valuation and Growth Potential
Over the past year, SoundHound AI’s stock has shown considerable volatility. Although the stock price has increased approximately 141% over the last 12 months, it has fallen roughly 52.5% in 2025. With a market capitalization of about $3.7 billion, SoundHound AI is presently trading at roughly 22.4 times this year’s anticipated sales. This valuation is still heavily reliant on growth, which introduces a potentially significant downside risk.
However, recent sell-offs have brought the company’s stock price to levels that appear more reasonable in the context of its current growth trajectory. In its latest quarterly report, SoundHound increased its full-year sales target for 2024 to a range of $82 million to $85 million. If the company reaches the midpoint of this guidance range, it would represent approximately 82% year-over-year sales growth. Furthermore, the company anticipates revenue for 2025 to be between $155 million and $175 million, indicating the potential for revenue to more than double this year.
Investment Outlook
Despite the recent sell-offs, SoundHound AI’s stock may not be suitable for risk-averse investors. However, the drop could offer a possible entry point for investors with a high-risk tolerance and a positive outlook on the business’s expansion potential.
