SoundHound AI Looks Unstoppable. Is It a Top AI Stock to Buy for 2026?

Most of investors' focus on the artificial intelligence (AI) race is centered around AI infrastructure and the huge capital expenditures (capex) required to build out the computing capacity needed. Less time is spent finding smaller companies that are deploying AI for relevant purposes, and there are a few companies that have some exciting products with potentially huge opportunities.

One of those is SoundHound AI (NASDAQ: SOUN), which continues to post quarter after quarter of impressive results and shows no signs of slowing down anytime soon. But is it a top AI stock to buy for 2026? Let's dig in.

Image source: Getty Images.

SoundHound AI improves upon a technology that has existed for years

SoundHound AI is focusing on integrating AI technology with audio recognition. This business plan isn't anything new; programs like Apple's Siri and Alexa have already tried this, and mostly failed. The majority of the time, these two digital assistants end up hearing the wrong words and giving you an answer you don't want.

SoundHound's technology is far more advanced and can outperform human counterparts in some scenarios, such as drive-thru order processing. Restaurant ordering is just one area the company is targeting. It also can have heavy use in digital automotive assistants, financial institutions, healthcare, and insurance. All of these are huge fields that could replace human employees if the AI model is good enough, and we're seeing early signs that SoundHound's platform may be able to do that.

During the third quarter, three of the top 10 financial services providers bought additional enterprise features from SoundHound, and another two renewed their contracts. The company also signed a contract with a regional hospital and added a few insurance companies around the world.

Use of SoundHound's services is spreading rapidly, and as customers get more comfortable with the quality and performance of its generative AI, it could lead to even more growth.

Strong third-quarter results included a revenue increase of 68% year over year to $42 million. Management also increased its full-year 2025 outlook to the range of $165 million to $180 million, up from the previous range of $165 million to $178 million.

We'll have to wait until 2026 before learning if SoundHound AI exceeds its guidance, but it wouldn't surprise me if it does, with the huge demand for its software. The company looks unstoppable, but is the stock worth buying now?

SoundHound AI's stock isn't cheap despite the recent sell-off

Since its fall in October, SoundHound's stock is down around 50% from its all-time high. That may seem odd considering the company's impressive growth, but if it had a high valuation entering October, the sell-off makes sense. And looking at a price-to-sales (P/S) chart, it's clear that this is exactly what's going on.

SOUN PS Ratio data by YCharts.

At its most recent peak, the stock traded for nearly 60 times sales -- an extremely expensive price tag. Now, it can be bought for about 31 times sales. Considering the company's tremendous growth, that's really not an awful price tag, although it's still far from cheap.

SoundHound has the growth to continue pushing its stock higher, so now investors are looking at profits. But the company spends about double what it brings in, and it has a deep hole to crawl its way out of.

SOUN Operating Margin (Quarterly); data by YCharts.

While I love SoundHound AI's growth, I'm concerned about its operating margin. I'm OK with some losses for a rapidly growing business, but these loss margins are just too large.

Management has a lot of work to do in this department, and it will only be a successful stock pick in 2026 if this metric starts to inch closer to profitability. If it does, I think SoundHound AI could become a huge AI winner in 2026. If it doesn't, the sell-off may continue.

Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy.