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China Auto Deals Boost Expansion: Can SoundHound Outrun Local AI?

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Key Takeaways

  • SOUN posted Q2 revenues of $42.7M, up 217% year over year on broad-based demand across key segments.
  • A top-five Chinese OEM deal expands SOUN's auto footprint with the global rollout of its voice AI tech.
  • SOUN's 2025 revenue outlook raised to $160-178M, with adjusted EBITDA profitability targeted by year-end.

SoundHound AI (SOUN - Free Report) just logged its strongest quarter ever, posting second-quarter 2025 revenues of $42.7 million — up 217% year over year — on the back of surging demand across restaurants, enterprise and automotive. The standout was a major win in China: a deal with a top-five Chinese OEM that will put SoundHound’s generative AI voice platform into millions of vehicles. The contract expands the company’s global automotive footprint and positions it alongside winning auto brands expanding overseas.

The strategic question for investors is whether SoundHound can sustain that momentum in one of the most competitive AI markets on the planet. Local Chinese AI players, often backed by government funding and integrated tightly with domestic supply chains, present fierce competition. Yet, management argues SoundHound holds an edge in technology, pointing to its Polaris foundation model, which delivers 35% greater accuracy and four-times lower latency than peers. Moreover, its multilingual capabilities make it attractive to Chinese automakers looking to ship cars globally — something domestic rivals cannot always match.

Beyond autos, SoundHound is building an ecosystem around “Voice Commerce,” enabling drivers to order food, pay for parking and make reservations via voice assistants. This vision not just deepens OEM stickiness but could open entirely new revenue streams. Management raised its 2025 revenue outlook to $160-178 million and sees a path to adjusted EBITDA profitability by year-end.

The China deal validates SoundHound’s global ambitions, but local AI challengers loom large. The stock’s upside hinges on whether superior tech and ecosystem play can outpace entrenched domestic players.

Competitors in AI Voice and Automotive Arena

SoundHound faces stiff competition from C3.ai (AI - Free Report) and BigBear.ai (BBAI - Free Report) as it scales into global auto and enterprise markets. C3.ai has positioned itself as a broad enterprise AI platform with deep penetration in energy, defense, and manufacturing. Its partnerships with global integrators allow it to embed AI across mission-critical applications, and with automotive suppliers increasingly adopting predictive and generative AI, C3.ai has the credibility to challenge SoundHound’s expansion narrative.

Meanwhile, BigBear.ai has gained traction through defense and international partnerships, including recent alliances in the UAE and Panama. With a focus on data fusion, real-time analytics, and AI autonomy, BigBear.ai is expanding beyond U.S. government contracts into commercial and transport markets. For SoundHound, the threat is that BigBear.ai could leverage its cross-border credibility to woo the same OEMs and enterprises. Both C3.ai and BigBear.ai remain formidable rivals in this fast-moving AI landscape.

SOUN’s Price Performance, Valuation and Estimates

SoundHound shares have gained 13.1% in the past three months against the Zacks Computers - IT Services industry’s 9.7% decline.

SOUN Price Performance

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In terms of its forward 12-month price-to-sales ratio, SOUN is trading at 24.51, up from the industry’s 17.09.

P/S (F12M)

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Image Source: Zacks Investment Research

Over the past 30 days, the Zacks Consensus Estimate for SOUN’s 2025 loss per share has narrowed to 13 cents from 16 cents. The estimated figure indicates an improvement from the year-ago loss of $1.04 per share.
 

Zacks Investment Research
Image Source: Zacks Investment Research

SOUN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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