Is SoundHound Stock a Buy Based on Its $140 Billion Total Addressable Market?

On May 7, SoundHound AI (NASDAQ: SOUN) reported its first-quarter 2026 earnings report, featuring revenue that met expectations, but shares still dropped sharply afterward.

The drop appears to be due to several issues. The company did not raise guidance in its report, markets are worried about growing losses, and the stock price had already had a big run-up heading into the report. Still, SoundHound is in the early stages of meeting demand from what it projects is a $140 billion total addressable market (TAM), so this recent short-term pullback may not be as big an issue for long-term investors.

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What happened in earnings

Revenue was strong for the first quarter at $44.2 million, a 52% increase from the previous year. SoundHound also announced several new deals, including an agreement with Walmart to integrate its voice artificial intelligence (AI) across the retailer's television brand. SoundHound also reaffirmed its 2026 full-year revenue guidance of $225 million to $260 million and forecast 2027 revenue to fall within a range, at a minimum, of $350 million to $400 million.

What didn't sit well with the markets were growing losses. There may also have been expectations that SoundHound would have boosted its guidance for the rest of the year, which didn't materialize. Pair that with the stock price running up higher before this report, and you have the perfect recipe for a short-term pullback.

The addressable market

If SoundHound is right that its TAM is $140 billion, we're still just in the early innings of the more meaningful revenue this company could be generating. That addressable market includes opportunities across everything from smart devices to customer service to retail. It has executed well thus far by signing up big-name clients to serve as proof points for the business use cases of its technology, as we just saw with its agreement with Walmart.

In the automotive sector, a vehicle integrated with SoundHound's tech lets a driver use the voice system for hands-free food ordering.

Restaurants can use the technology for drive-thru transactions, preorders, and kiosk ordering. According to SoundHound, its clients see an 11% increase in revenue compared to non-AI locations and a 14% increase in customer satisfaction when its voice technology is implemented. Some of those clients include White Castle, Firehouse Subs, Jersey Mike's, and more.

Just to offer another example of SoundHound's AI agents in action, in the travel and hospitality industry, its agents can book flights, coordinate rides, and process payments all in a single interaction.

Looking forward

There really weren't a lot of surprises in the Q1 2026 earnings report, so this sell-off may prove to be a buying opportunity for aggressive investors. This is also a growth stock that doesn't have any debt, which is rare. It's already projecting strong sales for 2027, and as the company said, that forecast is the minimum that's expected.

This can be a long-term buy, but anyone interested in investing will also have to deal with many ups and downs along the way. With a beta of 2.7, the stock is more than twice as volatile as the broader markets.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SoundHound AI and Walmart. The Motley Fool has a disclosure policy.