Why SoundHound AI's CEO Says the Company Doesn't Need to Spend Excessively on AI Like Big Tech Giants

A big challenge for SoundHound AI (NASDAQ: SOUN) may be keeping up with larger players in the tech sector as it looks to expand its business. There's considerable competition in artificial intelligence (AI) and in the voice AI services that SoundHound offers. And those concerns may be part of the reason why the stock has struggled to rally this year; it's down around 10% thus far in 2026.

But SoundHound's management remains confident about its opportunities, and its CEO believes that, unlike larger tech companies, it doesn't need to spend excessively and waste money on AI. Here's why.

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SoundHound's CEO is confident that the company will not be as wasteful as other tech giants

On SoundHound's most recent earnings call, its CEO Keyvan Mohajer suggested that the AI company may not be as wasteful as hyperscalers and big tech because it isn't looking to overcomplicate the task at hand.

"Unlike some companies that are throwing billions to avoid missing out, we know what we are doing. We know our training recipe. We have the data, and our models will be specialized for what they will be used for. Importantly, we believe that models that handle a customer service inquiry do not need to also solve quantum physics problems or answer history questions in haiku."

By having a narrower approach in its AI strategy, SoundHound believes it can help keep its costs lower, thus potentially putting it on a stronger path to profitability. And that's important because while the business has generated strong growth in recent quarters, the challenge is in being efficient and reducing unnecessary spend, in order to get to profitability. In each of the past four quarters, the company's operating expenses have totaled more than $60 million -- exceeding its revenue.

The company, however, still has a lot to prove

While management may be confident of its approach, SoundHound's financials remain underwhelming. Acquisitions have helped the business grow and diversify, but they also add complexity and costs, making it challenging for the company to improve its bottom line.

And during the first three months of the year, the company burned through $26.3 million from its day-to-day operating activities, which is more than the $19.2 million it used up during the same period last year. That's a concerning sign for a company that's still in the midst of its early growth and that needs to generate strong positive cash flow to show growth investors that it's on the right path.

Investors should take a CEO's confidence with a grain of salt, however, because ultimately it's the financials and the numbers that matter most. And until they improve for SoundHound and show significant improvement, the stock is going to remain a risky buy, which is why I'd continue to take a wait-and-see approach with it.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI. The Motley Fool has a disclosure policy.