SOUN Stock Price Alert: SoundHound Stock Plummets 34% – Is it a Buy Now?

TradingKey - AI voice company SoundHound (nasdaq: soun) AI voice company SoundHound (NASDAQ:SOUN) shares plunged 34% despite reporting unexpectedly strong third-quarter 2025 earnings. Why did this happen? This article will analyze SOUN's historical stock performance and the factors influencing its share price.

Recent news about Soun Stock

AI voice company SoundHound reported robust fiscal third-quarter 2025 revenue growth and raised its full-year outlook, yet its stock plummeted 34% amid profitability and valuation concerns. SoundHound announced in November its Q3 revenue soared 68% year-over-year, leading the company to boost its 2025 full-year revenue guidance to between $165 million and $180 million, underscoring confidence in its growth trajectory.

Despite the optimistic forecast, the market has not mirrored this sentiment, driving the recent 34% decline in SoundHound's shares over the past month. This investor apprehension stems primarily from worries about the company's path to profitability and its elevated valuation.

SoundHound has also recently forged several new partnerships. These collaborators include technology service distributors Telarus and AVANT Communications, restaurant chain Red Lobster, and automotive giant Stellantis, among others.

What kind of company is SoundHound (nasdaq: soun)?

SoundHound AI Inc., a California-based AI voice recognition and processing technology provider founded in 2005, went public via a SPAC merger in 2022. The company has carved out a niche in the AI sector by focusing intensely on voice recognition technology development.

In 2022, SoundHound completed its merger with blank-check company Archimedes Tech SPAC Partners Co. on April 27, subsequently changing its stock ticker to SOUN and commencing trading on April 28.

SoundHound's Core Business

SoundHound's core products fall into two main categories: the independentHoundify voice AI developer platform, which allows users to custom-build their own voice assistants, andready-made AI software.

Houndify is a developer platform offering a full suite of tools and resources, including APIs and SDKs. Unlike bundled voice assistants such as Apple's Siri, Amazon's Alexa, or Google's Assistant, Houndify enables businesses to retain complete control over their brand, users, and data.

The ready-to-use AI software portfolio includes the advanced conversational AI assistant SoundHound Chat AI. It also features industry-specific tools such as Smart Ordering and Dynamic Drive-Thru for restaurant order taking, and Smart Answering for call centers.

SoundHound Chat AI is primarily deployed in the automotive industry as an in-car assistant. However, the application holds potential for tackling more complex scenarios.

SoundHound's Technological Edge

The company's core competitive advantage lies in its patented"Speech-to-Meaning" technology. This technology directly comprehends meaning from voice input in real-time, eliminating the need for an intermediate text conversion step. Compared to traditional methods, Speech-to-Meaning offers faster and more accurate responses.

Historical Soun Stock Price Trends

April-May 2022: Post-SPAC Listing Surge

SOUN debuted on April 28, 2022, through a SPAC merger. On its first trading day,SOUN opened at $8.72, reached an intraday high of $10.8, and closed lower at $7.5. SOUN hit a new intraday high of $18.14 on May 3, and recorded a new closing high of $14.98 on May 5.

May 2022 - Early 2024: Downturn Cycle, Trading at Lows

SOUN's stock price fell 76.4% throughout 2022, reaching approximately $1 by year-end. Its lowest closing price hit $0.97. In 2023, SOUN's stock rose 15.85% for the full year. However, it remained at historical lows compared to its initial listing price.

2024: NVIDIA Stake Boosts Stock to 835.8% Full-Year Gain

On February 14, 2024, NVIDIA disclosed its stake in SoundHound.The following day, SOUN's share price surged as much as 79%, ultimately closing up 66% at $3.76, initiating its 2024 rally.

In December 2024, SOUN's stock soared 113% for the month. On December 26, it hit a new intraday high of $24.98 and a new closing high of $24.23. This marked its highest price to date, contributing to an 835.8% increase for the full year 2024.

SOUN's record-breaking December performance was also linked to the expansion of its partnerships. SoundHound provided voice AI support for Church's Texas Chicken drive-thru restaurants. Furthermore, institutional analysts from firms like Wedbush and Frost & Sullivan issued bullish ratings. These factors collectively propelled SOUN's surge in December 2024.

2025 to Date: High Volatility Cycle

After reaching its all-time high share price at the end of 2024, SOUN began to correct. On February 14, 2025, SOUN's stock plummeted nearly 30% after NVIDIA disclosed it had liquidated its stake in the company. By mid-year, SOUN's share price had fallen 70% from its historical peak, trading around $7.

On August 8, 2025, SOUN's stock surged over 25% following better-than-expected Q2 earnings. However, it subsequently erased those gains, falling over 20% in the week of August 14-21. Beyond profit-taking, this downturn was partly attributed to broader declines in AI stocks. These declines were spurred by rising inflation fueling interest rate hike concerns and a Massachusetts Institute of Technology report indicating AI investments have not yet translated into improved profits.

From late August to mid-October, SOUN's stock generally rose. In September, SoundHound secured partnerships with companies including Primary Health Solutions and Red Lobster. The company also announced the acquisition of AI firm Interactions, driving a 23.5% increase in its share price for the entire month. Driven by the continued positive impact of Q2 earnings and a series of favorable news, SOUN reached a temporary peak with a closing price of $21.4 on October 15. However, it subsequently began to decline, dropping 45% to $11.82 as of the current date (November 26 close).

What factors influence SOUN stock price?

1. The 2024 AI Hype Explosion

As generative AI applications accelerate commercialization and adoption, the AI boom in capital markets fully erupted in 2024. Investor confidence in AI companies has steadily grown, with SOUN recovering from its slump and transforming into a hot stock.

SoundHound's stock soaring in 2024 due to Nvidia's stake exemplifies this trend. This provided strong backing from the AI chip giant and hinted at potential future technical collaboration, resulting in a 66% surge in its share price.

However, this factor can also have the opposite effect. For instance, in August 2025, a Massachusetts Institute of Technology report indicated that AI investments had yet to improve profits, triggering a widespread decline in AI stocks on August 19, which SOUN was unable to escape.

2. Social Media Influences Market Sentiment

In September 2025, SoundHound announced a series of partnerships, sparking exceptionally fervent discussions on social media platform X. Some analysts believe these discussions fueled a 23.5% rise in SOUN's stock price that month.

Analysts suggest that these discussions, rather than SoundHound's announcements themselves, were the driving force behind the stock's appreciation.This is because some announcements saw the stock price fall instead of rise on the day of release. Furthermore, the stock's upward trend showed a stronger correlation with increased online discussions, much like a meme stock.

Indeed, SOUN's stock performance at times aligns with the characteristics of a meme stock,such as its stock price decoupling from fundamentals and being more influenced by market sentiment, speculation, and hype, as well as maintaining a high valuation despite persistent losses.

3. Unmet Profitability Expectations

Since its establishment in 2005, SoundHound has yet to achieve profitability. Although it recorded a record $114 million in revenue for the first three quarters of 2025, a 127% year-over-year increase, and Q3 revenue grew 68% year-over-year, losses have persisted. The Q3 net loss soared to $109.3 million, more than five times the $21.8 million reported in the same period last year, offsetting the significant sales growth.

A core issue lies in the company's insufficient ability to control costs. Financial reports from recent quarters show that the company's revenue growth has outpaced gross profit growth, indicating that SoundHound has not yet generated sufficient operating leverage. Despite expanding its scale, unit costs have not decreased; variable costs are rising significantly faster than revenue.This notably diverges from the ideal state for high-growth tech companies pursuing high operating leverage.

Furthermore, the company has continued to pursue acquisitions without generating profits, further widening its lossesand intensifying market skepticism about its profitability.

Given its current cash reserves of only $269 million, if SoundHound cannot achieve profitability in the short term and expenditures continue to increase, it will need to raise more capital in the coming years. This, however, could dilute existing shareholder equity, harm shareholder returns, and negatively impact its stock price.

Are sun stocks worth investing in?

4 Reasons to Invest:

1. Stock Price Hasn't Peaked

According to TradingKey's stock price rating system,the average target price from nine analysts is $16.938, while SOUN's latest closing price (as of November 26) was $11.82. This suggests an upside potential of 43%.

2. Rapid Performance Growth, Strong Commercialization Prospects, and Significant Market Potential

Financial reports indicate significant year-over-year quarterly revenue growth over the past year, primarily driven by rapid expansion in the Quick Service Restaurant (QSR) sector. SoundHound's client roster includesseven of the top 20 global fast-food chains, and its AI-powered ordering system has been deployed in over 14,000 restaurants. SoundHound has undeniably emerged as a leader in this space.

Beyond AI ordering systems, SoundHound's applications span various scenarios, from automotive voice systems to banking apps. Research by Grand View Research projects the conversational AI market to reach$41.39 billion by 2030, indicating a substantial untapped market for SoundHound to expand into.

3. Unique Technology Path

The company employs a unique technology path. Its core "Speech-to-Meaning" technology directly and in real-time understands speech meaning, delivering faster, more accurate responses. Furthermore, unlike voice assistants from tech giants, SoundHound's developer platform operates independently of any specific ecosystem. This makes it particularly appealing to businesses seeking to retain control over their brand, users, and data.

4. Substantial Backlog Ensures Revenue Stability

As of the end of 2024, SoundHound's order backlog totals $1.2 billion, with an average contract duration of seven years. This substantial backlog secures stable contractual revenue for the company in the coming years, positioning it for long-term revenue growth.

2 Reasons Not to Invest:

1. Overvaluation

Based on SOUN's current market capitalization (as of November 26 close) of $4.966 billion and last year's revenue of $148.35 million,the company's price-to-sales (P/S) ratio stands at approximately 33x. This figure not only exceeds the industry average and that of many tech giants but is even higher than Nvidia's. Such a high P/S ratio indicates extremely high market expectations for the company's future revenue growth, making the stock highly susceptible to significant volatility if growth falls short of projections.

Furthermore, this implies that investors in the stock are paying a significant premium. Given persistent losses and an unclear path to profitability, purchasing the stock at a 33x P/S ratio does not offer compelling value. However, compared to a P/S ratio as high as 111x in December 2024, the current figure has fallen significantly, suggesting a move towards more rational valuation.Investors might consider other entry points, such as when the company's management provides clear guidance on its timeline to profitability.

2. Fierce Competition, Insufficient Technological Barriers

SoundHound faces competition not only from direct competitors in its niche, such as Cerence, which specializes in in-car voice assistants, but must also contend with overwhelming competition from broader, general-purpose AI platforms. Several prominent AI companies are currently expanding their large language models and platforms to penetrate the voice AI market.

For instance, Google leads the industry in speech recognition accuracy, with its Google Assistant voice assistant and Dialogflow development platform. Amazon's Alexa intelligent assistant, accessible via its Echo smart speaker series, controls entertainment, shopping, and smart home devices, and also offers enterprise-grade services like Amazon Lex. Apple's Siri provides on-device operations and controls music and smart home devices through HomePod.

These tech giants typically possess larger user bases and vaster amounts of training data, and the performance of AI models largely depends on data volume. This implies that SoundHound's current technological advantages, which it prides itself on, are at risk of being surpassed.

in conclusion

SoundHound, a company with differentiated development in the AI sector, boasts strong commercialization potential and a substantial market opportunity. However, investment remains risky given its currently elevated price-to-sales ratio.

FAQ

1. What are SOUN's immediate resistance and support levels?

The immediate support level is in the $11.21-$11.63 range, while the resistance level is between $12.16-$12.80. Additionally, $10 represents a key psychological support level; a breach could lead to further declines.

2. What key data points should investors focus on in SOUN's Q4 2025 earnings report?

Key areas to watch include: ① Q3 2025 revenue saw a quarter-over-quarter decline, so investors should monitor whether Q4 revenue can resume growth. ② The company's loss situation and any progress made in controlling operating expenses. ③ The total order backlog as of the end of 2025. ④ The full-year 2026 financial guidance.