With Shares Down 41% This Year, Could Buying SoundHound AI (SOUN) Stock Today Set You Up for Life?
Key Points
SoundHound has been growing its revenue robustly.
It's currently posting net losses instead of gains, though.
It has a lot of potential, but it's probably not a slam-dunk investment.
- 10 stocks we like better than SoundHound AI ›
If you're a growth stock enthusiast, you may be familiar with SoundHound AI (NASDAQ: SOUN), a company specializing in voice and conversational artificial intelligence (AI) technology for companies -- which lets people talk to their cars, among other things. It has been a bit of a market darling in recent years, averaging annual gains of 42.7% over the past three years.
But over the past year, it's down 63%. And year to date, it's down 41%. Does that make it a bargain now? Could buying into SoundHound now set you up for life? Let's see.
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The company began as a music-recognition specialist before pivoting a bit into the voice artificial intelligence (AI) market. Its technology is now found in cars, enabling drivers to use voice commands, and in restaurants, where it's helping make customers' orders more accurate, among other things.
Bulls like the fact that SoundHound is growing rapidly. Its second quarter featured record revenue of $62 million, up 45% year over year, and achievements such as signing "a 7-figure deal with a nationally ranked healthcare system with 30,000 employees throughout its hospitals, health parks, and medical offices."
Bears worry, though, because the company is posting net losses rather than net profits, and it has been growing, in large part, through acquisitions.
I don't think you can expect SoundHound to "set you up for life," but it could grow for you over time. As I write this, its price-to-sales ratio is 12, down from 90 in 2024 and nearly 27 in 2025. So the stock is definitely a better value than it has been, but that's still a steep ratio. Another way to look at it is this: Its market capitalization, or market value, is around $2.7 billion. If you expect it to be significantly higher than that years from now and you plan to hang on to the stock, you might consider snapping up some shares.
Should you buy stock in SoundHound AI right now?
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Selena Maranjian 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.
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