SoundHound AI Stock: Should Investors Worry About Recent Insider Selling by Executives?

Key Points

• SoundHound AI share prices have been volatile over the past year, and recently pulled back.

• Insiders have sold shares in September, but it doesn't look like anything out of the ordinary.

• Meanwhile, the company has a huge opportunity in agentic AI in front of it.

• 10 stocks we like better than SoundHound AI ›

SoundHound AI (NASDAQ: SOUN) share prices have been volatile over the past year, which can put insider selling under the microscope. In September, three top executives sold stock: CTO Timothy Stonehocker sold about 2,200 shares, VP of Engineering Majid Emami unloaded roughly 36,000 shares, and CFO Nitesh Sharan sold more than 60,000 shares. These trades were also made under 10b5-1 plans, which means they were pre-scheduled.

The sales were small in context, and all three execs continue to own a lot of stock. As such, this doesn't look like executives were rushing for the exits, but instead routine selling after a strong run in the stock. Meanwhile, insider selling has not been a reliable indicator of SoundHound AI's past performance.

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While sometimes the headlines of executive selling can be alarming, it's generally not something that most investors should worry about. Executives sell shares for a lot of reasons, and often much of their compensation comes in the form of stock.

Image source: Getty Images.

Looking to be an agentic AI leader

The bigger story is what SoundHound is building. It started as an artificial intelligence (AI) voice company, whose speech-to-meaning and deep-meaning understanding technology goes beyond traditional speech recognition and can interpret a user's intent in real time. That technology has found strong acceptance in the auto industry, powering voice assistants in vehicles for Hyundai, Stellantis, and others. It has also made strong inroads in restaurants, powering drive-thru, phone, and kiosk ordering for several big chains.

However, the SoundHound story became even more interesting when it acquired a company called Amelia last year. Amelia specialized in virtual agents in complicated, regulated industries like healthcare and financial services. These industries all have their own jargon and compliance requirements, so Amelia brought with it both new technology and an impressive client list. SoundHound then combined its advanced speech-to-meaning platform with Amelia's conversational intelligence to create a far more capable agent.

The launch of Amelia 7.0 this year was a key step forward in SoundHound's agent AI push. The platform's AI agents act like a digital employee that understands intent and interacts naturally with people to help complete tasks autonomously. It can integrate with ERP and CRM platforms, medical systems, banking, and insurance. This makes it useful for more than just voice commands, as it can actually resolve problems or complete transactions end-to-end.

This is where SoundHound's biggest growth potential lies. A platform that can cut customer service costs by automating routine work has a compelling value proposition. The company is already migrating 15 of its largest enterprise clients onto the new platform.

However, it isn't stopping there. It also recently added vision AI, giving it the ability to pair visual recognition with its voice agents, which opens up more use cases. It also recently announced it is acquiring a company called Interactions to further enhance the abilities of its AI agents.

Even before its push into agentic AI, SoundHound was in hypergrowth mode. Revenue jumped 217% year over year to $42.7 million in the second quarter, which was well above expectations. Management also raised its full-year revenue guidance to between $160 million to $178 million and expects to reach adjusted EBITDA profitability by the end of 2025. Gross margins improved sequentially despite some initial pressure from the Amelia acquisition.

Is SoundHound's stock a buy?

Despite its strong revenue growth, SoundHound's stock is still speculative. Execution risk remains high because competition in agentic AI is intense, and there are bigger players in the space with deeper pockets. However, the recent pullback in the stock looks more about sentiment and valuation than any cracks in the growth story.

Insider selling in September doesn't change the SoundHound story. It has a huge opportunity ahead, and if it can deliver on its agentic AI vision, its long-term upside potential is huge. For investors willing to ride out some volatility, SoundHound is a growth stock worth having a small, speculative position in.

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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.