SoundHound AI's Stock Price Is Down 29% in the Last 6 Months -- Here's Why It Still Could Be a Long-Term Buy

The past few months haven't been kind to SoundHound AI (NASDAQ: SOUN) shareholders. The company posted record revenue in the first quarter, but that wasn't enough to offset concerns about its pending acquisition of another company.

As of this writing, shares are down roughly 29% over the last six months. The good news is that if SoundHound successfully integrates that acquisition into its business, its momentum could be reignited, sending the stock price higher.

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A wise purchase or a risky gamble?

The company that SoundHound is looking to buy (at an equity value of $43 million) is LivePerson (NASDAQ: LPSN) -- it believes the target's digital engagement suite will complement its current business. SoundHound's focus and strength are in audio-enabled artificial intelligence (AI), which it can use to embed its tech in everything from vehicles to restaurant drive-thrus. LivePerson operates primarily through messaging with its AI agents, such as answering a question in a chat box on a website or sending a reminder via text message.

If the acquisition closes as expected in the second half of this year, SoundHound plans to cross-sell products, opening a potentially significant new revenue source; in 2025, LivePerson generated $243.7 million in revenue, while SoundHound generated just under $169 million.

It sounds like a good fit on paper, but there are two issues that investors seem worried about with this deal. One is that SoundHound is paying for LivePerson and settling the target's outstanding debt with its own stock, which dilutes SoundHound shareholders. That can create short-term pressure, but it could be resolved so long as this deal provides long-term value.

That potential long-term value, however, is the other issue weighing on the stock. LivePerson reported a net loss of more than $67 million in 2025, and SoundHound itself is unprofitable. That means one unprofitable company will have to successfully integrate into its operations another unprofitable company that has been struggling for years.

The long-term outlook for SoundHound

SoundHound expects LivePerson to add $100 million to its revenue in 2027, bringing the total to between $350 million and $400 million. SoundHound currently has no debt and expects to be debt-free after the acquisition.

At the time of its Q1 report, management reiterated its forecast for 2026 revenue of between $225 million and $260 million, so hitting the upper end of that $400 million range in 207 would require a solid jump. The company will still have to work on profitability, but it's still a growth stock in an aggressive expansion phase for now. That's going to create a lot of short-term volatility. In order for the stock price's momentum to improve over the rest of the year, there would either need to be a broad market rally for the stock to get swept up in, or SoundHound would need to boost its 2026 revenue guidance in one of its next earnings reports.

Over the longer term, if SoundHound can successfully integrate LivePerson into its operations, the deal could add meaningful value to the company. It's still liable to remain a volatile stock, however. So even if you're among the most aggressive of investors and (after weighing the risks and potential rewards) you want to add it to your portfolio, you'd be best advised to make it a relatively small position.

Jack Delaney 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.