Is SoundHound AI Stock a Buy Now?

SoundHound AI (NASDAQ: SOUN) can be a polarizing stock. Despite two decades of operating history and an order backlog of more than $1 billion, the company is in the early innings of collecting revenues and probably a couple of years away from turning a profit.

But SoundHound AI is a leader in a promising field. The company uses advanced artificial intelligence (AI) to help humans and machines communicate via voice commands. The long-term target market looks enormous.

With fourth-quarter results due in the next few weeks, the stock has fallen more than 55% over the past four months. Here's why I see a fantastic buying opportunity in this price drop.

Why the stock price drop makes sense (sort of)

At first glance, SoundHound AI's price drop looks completely reasonable. With trailing revenue of just $148.4 million, the stock trades at 25 times sales on Feb. 8. The bottom line shows a net loss of $313.4 million over the same period and the company is burning more cash than it generates.

But that's not the whole story. SoundHound AI has genuine momentum in a market that barely exists yet. You know that moment when you're trying to navigate a phone-based menu system and the robot voice makes you want to throw your phone? SoundHound is trying to fix that. Its AI actually understands how humans talk; not just keywords, but natural-sounding conversational speech. Quick and accurate processing is a key part of this experience, as people often get frustrated dealing with long periods of silence.

And businesses are buying in. Hamburger chain Five Guys just renewed their partnership after SoundHound AI's system handled over a million customer orders. Toast's (NYSE: TOST) restaurant management platform and many Stellantis (NYSE: STLA) vehicles are shipping with integrated SoundHound AI controls. These aren't small-time players taking a flyer on unproven tech. They're large companies with real money and high expectations of service quality.

The growth story behind the red ink

The $1 billion-plus order backlog suggests that customers see long-term value here. Trailing sales jumped 120% higher over the last year, as SoundHound AI started collecting revenues from some of its long-term contracts.

And while sustained profitability remains a few years out, analyst estimates point to positive EPS by fiscal year 2027. That's just next year.

The company isn't standing still; it's scaling quickly.

Image source: Getty Images.

The baby, the bathwater, and the buying opportunity

That tells me the market got spooked by macro headwinds and concerns about an AI bubble. Wall Street threw the voice-controlled baby out with the AI bathwater. Rising rate concerns and general risk-off sentiment punished stocks like SoundHound AI that depend on future earnings rather than current profits. This drop is a valuation reset driven by market mood, not a fundamental collapse in the business.

For patient investors, that distinction matters. If you believe voice AI will become a standard interface for restaurants, cars, and customer service, SoundHound AI is one of the few pure-play ways to bet on that future.

I know that the company faces serious competition, of course. For example, Wendy's (NASDAQ: WEN) drive-through windows rely on an in-house AI system powered by Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Gemini platform. I get it if you hesitate to bet against deep-pocketed tech giants.

But the competition doesn't scare me here. The voice AI market is big enough that SoundHound doesn't need to crush Alphabet's Google to succeed. In fact, the presence of large rivals proves that SoundHound AI is pursuing an important market. It just needs to keep landing contracts, delivering results, and proving the technology works. So far, so good on all three counts.

So is SoundHound AI stock a buy now? The stock hasn't traded below $9 since April 2025, presenting an unusually modest price risk. For investors with patience and a tolerance for turbulence, the recent price drop looks like an opportunity. The business is growing fast, customers are sticking around, and the long-term market for voice AI is barely getting started.

Sometimes the best time to buy is when everyone else is heading for the exits. On that note, I recommend buying SoundHound AI stock today if you don't mind waiting for a profitable payoff.

Anders Bylund has positions in Alphabet, SoundHound AI, and Toast. The Motley Fool has positions in and recommends Alphabet, SoundHound AI, and Toast. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.