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SoundHound Stock Lost 23% in a Month: Bargain Opportunity or Red Flag?
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Key Takeaways
SOUN shares have plunged nearly 23% in a month, underperforming the broader tech sector and market.
Revenue surged 127% YTD to $114M, with full-year guidance raised to $165M-$180M.
SOUN posted a $109.3M Q3 GAAP loss, with high cash burn and rising competition clouding the outlook.
SoundHound AI, Inc. (SOUN - Free Report) has seen its momentum stall sharply in recent weeks. After a volatile year shaped by rapid AI adoption, high-profile customer wins and major product expansion, the stock has now plunged 22.8% over the past month, decreasing to about $11.78 as of Dec. 3. This slide stands in stark contrast to the broader market. During the same period, the Zacks Computers – IT Services industry gained 0.3%, the Zacks Computer and Technology sector rose 1.2%, and the S&P 500 gained 1.6%.
SOUN Stock’s 1-Month Performance
Image Source: Zacks Investment Research
SOUN shares are now sitting well off its 52-week high of $24.98 and modestly above its $6.52 low. The stock is also trading below both the 50-day moving average (around $15.75) and the 200-day moving average (about $12.09) — a technically bearish setup. The downtrend in the shorter-term average slipping beneath the long-term average suggests sellers remain in control. The price trajectory on the chart also reveals that earlier momentum in September and October has faded, leaving the shares in a weaker technical posture with potential for further pressure unless fundamentals reassert themselves.
Image Source: Zacks Investment Research
SOUN’s Growth Momentum Strengthens Despite the Pullback
The fundamental story behind SoundHound remains one of rapid expansion. According to its third-quarter 2025 financial results, the company delivered $42 million in revenues during the quarter, rising 68% year over year. Across the first three quarters of 2025, the cumulative revenue hit a record $114 million, representing 127% growth. This surge underscores rising adoption of conversational AI across industries that include automotive, restaurants, financial services, IoT devices, healthcare, telecom and enterprise customer support.
Management’s confidence in the demand trajectory is evident in its upward revision of full-year expectations. The company now anticipates $165 million to $180 million in 2025 revenues, an increase from prior projections and a signal that deployments and expansions across customer accounts remain robust.
Tailwinds Supporting SoundHound’s Long-Term Story
One of the most important tailwinds for SoundHound is its broadening customer reach across industries that lend themselves to voice and agentic AI. Recent wins reflect strong momentum. In IoT and robotics, SoundHound signed a major deal to integrate its Chat AI into double-digit millions of devices for a large China-based technology company. This agreement will extend its presence into the rapidly expanding smart-device market in India. The automotive vertical, despite short-term macro pressure, continues to adopt its solutions, with Jeep rolling out SoundHound’s Chat AI voice assistant across Europe and a major global sports-car manufacturer working with the company to craft a branded voice personality.
The restaurant segment remains an anchor of steady demand. During the quarter, new deployments included Firehouse Subs, Five Guys, McAlister’s Deli and full rollouts at Habit Burger, Red Lobster and other chains, reinforcing the company’s position as a leader in automated voice ordering. Additional gains in healthcare and financial services, where organizations adopted or expanded enterprise AI solutions, further demonstrate the breadth of its commercial traction.
Another strong tailwind is the technology foundation itself. SoundHound’s platform is built around innovations such as Speech-to-Meaning, Deep Meaning Understanding, the multimodal Polaris foundation model and the Agentic+ enterprise framework, all of which are designed to execute conversational, generative and deterministic functions with high speed and accuracy. The company also continues to integrate and replace third-party technologies within acquired businesses, reducing cost structures and improving customer experiences through internally developed speech models and agentic tools.
The balance sheet provides additional support. As of the third quarter, SoundHound held $269 million in cash and carried no debt, offering financial flexibility for continued innovation and go-to-market expansion while navigating near-term losses.
Challenging Factors That Still Cloud the Investment Outlook
Even with its impressive revenue expansion, SoundHound also faces meaningful headwinds. The clearest challenge is its ongoing struggle with profitability. During the third quarter of 2025, the company reported a GAAP net loss of $109.3 million, which was widened in part by non-cash adjustments related to acquisition liabilities. On a non-GAAP basis, the net loss was $13 million, and adjusted EBITDA came in at a loss of $14.5 million. While the CFO emphasized that scale efficiencies and acquisition synergies should improve margins as the company approaches 2026, losses remain wide and cash usage is material.
Cash flow trends reinforce the concern. Through the first nine months of the year, operating cash outflow totaled more than $76 million, a level that highlights the company’s need to balance growth investments with prudent capital allocation as it moves toward its stated goal of breakeven.
The automotive business introduces additional complexity. Management noted that global tariffs and broader industry softness continue to weigh on automotive revenue, though it expects improvement as voice commerce and next-generation deployments scale in 2026. Automotive cycles tend to be long and sensitive to macro swings, making near-term growth less predictable than in subscription-based enterprise segments.
SoundHound’s acquisition strategy, highlighted most recently by the purchase of Interactions, brings both upside and risk. While the acquired business expands workflow orchestration capabilities within the enterprise agentic suite, integration can strain near-term expenses, and the company must demonstrate that cost synergies and cross-selling opportunities can materialize at the pace of management projects.
Valuation also remains a sticking point. SoundHound trades at approximately 21.5X forward 12-month sales, above the industry’s 16.54X and above its own three-year median. Although the market may justify a premium for an emerging AI platform with strong growth momentum, the mismatch between the valuation multiple and the company’s loss profile raises concerns about downside exposure if revenue momentum slows.
SOUN’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Analyst estimates revisions offer a mixed but cautious picture. The Zacks Consensus Estimate for SOUN’s loss per share for 2025 remains unchanged, whereas 2026 loss estimates have widened slightly, even as revenue projections continue to rise almost 100% for 2025 and nearly 39% for 2026. This combination of solid sales forecasts and softening earnings expectations underscores the investment tension — the top line is accelerating, but the bottom line has yet to follow.
SOUN’s Sales Estimate
Image Source: Zacks Investment Research
SOUN’s EPS Estimate
Image Source: Zacks Investment Research
Competition Intensifies as Voice and Agentic AI Markets Expand
Competition in voice and agentic AI is tightening, adding pressure to SoundHound’s recent stock performance. Nuance Communications — owned by Microsoft (MSFT - Free Report) — remains a powerful rival, and Nuance dominates healthcare and contact-center deployments. Nuance consistently sets industry standards around accuracy and conversational quality, keeping competitive pressure high. Cerence (CRNC - Free Report) is another major contender, and it continues to lead automotive voice systems with strong OEM partnerships. Cerence still shapes the embedded voice market SoundHound aims to disrupt. LivePerson (LPSN - Free Report) also challenges SoundHound, and it competes aggressively in enterprise automation. LivePerson increasingly positions itself as a full-stack agentic AI provider, intensifying the rivalry.
Bargain or Red Flag?
The recent selloff reflects an uneasy balance between SoundHound’s extraordinary growth and its persistent financial risks. On the upside, the company is scaling rapidly across diverse industries, raising expectations for the current year and reinforcing its leadership in advanced conversational AI. Its foundation in proprietary speech models, rapidly expanding enterprise partnerships and strengthened cross-industry deployments form a compelling long-term narrative.
Yet the cautionary view is equally grounded. The stock’s technical breakdown, combined with widening operating losses, heavy cash usage, acquisition-related complexity and a valuation premium, suggests the path forward may be volatile. The Zacks Rank #4 (Sell) captures this discomfort, highlighting negative earnings momentum despite SoundHound’s strong revenue outlook.
Image: Bigstock
SoundHound Stock Lost 23% in a Month: Bargain Opportunity or Red Flag?
Key Takeaways
SoundHound AI, Inc. (SOUN - Free Report) has seen its momentum stall sharply in recent weeks. After a volatile year shaped by rapid AI adoption, high-profile customer wins and major product expansion, the stock has now plunged 22.8% over the past month, decreasing to about $11.78 as of Dec. 3. This slide stands in stark contrast to the broader market. During the same period, the Zacks Computers – IT Services industry gained 0.3%, the Zacks Computer and Technology sector rose 1.2%, and the S&P 500 gained 1.6%.
SOUN Stock’s 1-Month Performance
Image Source: Zacks Investment Research
SOUN shares are now sitting well off its 52-week high of $24.98 and modestly above its $6.52 low. The stock is also trading below both the 50-day moving average (around $15.75) and the 200-day moving average (about $12.09) — a technically bearish setup. The downtrend in the shorter-term average slipping beneath the long-term average suggests sellers remain in control. The price trajectory on the chart also reveals that earlier momentum in September and October has faded, leaving the shares in a weaker technical posture with potential for further pressure unless fundamentals reassert themselves.
Image Source: Zacks Investment Research
SOUN’s Growth Momentum Strengthens Despite the Pullback
The fundamental story behind SoundHound remains one of rapid expansion. According to its third-quarter 2025 financial results, the company delivered $42 million in revenues during the quarter, rising 68% year over year. Across the first three quarters of 2025, the cumulative revenue hit a record $114 million, representing 127% growth. This surge underscores rising adoption of conversational AI across industries that include automotive, restaurants, financial services, IoT devices, healthcare, telecom and enterprise customer support.
Management’s confidence in the demand trajectory is evident in its upward revision of full-year expectations. The company now anticipates $165 million to $180 million in 2025 revenues, an increase from prior projections and a signal that deployments and expansions across customer accounts remain robust.
Tailwinds Supporting SoundHound’s Long-Term Story
One of the most important tailwinds for SoundHound is its broadening customer reach across industries that lend themselves to voice and agentic AI. Recent wins reflect strong momentum. In IoT and robotics, SoundHound signed a major deal to integrate its Chat AI into double-digit millions of devices for a large China-based technology company. This agreement will extend its presence into the rapidly expanding smart-device market in India. The automotive vertical, despite short-term macro pressure, continues to adopt its solutions, with Jeep rolling out SoundHound’s Chat AI voice assistant across Europe and a major global sports-car manufacturer working with the company to craft a branded voice personality.
The restaurant segment remains an anchor of steady demand. During the quarter, new deployments included Firehouse Subs, Five Guys, McAlister’s Deli and full rollouts at Habit Burger, Red Lobster and other chains, reinforcing the company’s position as a leader in automated voice ordering. Additional gains in healthcare and financial services, where organizations adopted or expanded enterprise AI solutions, further demonstrate the breadth of its commercial traction.
Another strong tailwind is the technology foundation itself. SoundHound’s platform is built around innovations such as Speech-to-Meaning, Deep Meaning Understanding, the multimodal Polaris foundation model and the Agentic+ enterprise framework, all of which are designed to execute conversational, generative and deterministic functions with high speed and accuracy. The company also continues to integrate and replace third-party technologies within acquired businesses, reducing cost structures and improving customer experiences through internally developed speech models and agentic tools.
The balance sheet provides additional support. As of the third quarter, SoundHound held $269 million in cash and carried no debt, offering financial flexibility for continued innovation and go-to-market expansion while navigating near-term losses.
Challenging Factors That Still Cloud the Investment Outlook
Even with its impressive revenue expansion, SoundHound also faces meaningful headwinds. The clearest challenge is its ongoing struggle with profitability. During the third quarter of 2025, the company reported a GAAP net loss of $109.3 million, which was widened in part by non-cash adjustments related to acquisition liabilities. On a non-GAAP basis, the net loss was $13 million, and adjusted EBITDA came in at a loss of $14.5 million. While the CFO emphasized that scale efficiencies and acquisition synergies should improve margins as the company approaches 2026, losses remain wide and cash usage is material.
Cash flow trends reinforce the concern. Through the first nine months of the year, operating cash outflow totaled more than $76 million, a level that highlights the company’s need to balance growth investments with prudent capital allocation as it moves toward its stated goal of breakeven.
The automotive business introduces additional complexity. Management noted that global tariffs and broader industry softness continue to weigh on automotive revenue, though it expects improvement as voice commerce and next-generation deployments scale in 2026. Automotive cycles tend to be long and sensitive to macro swings, making near-term growth less predictable than in subscription-based enterprise segments.
SoundHound’s acquisition strategy, highlighted most recently by the purchase of Interactions, brings both upside and risk. While the acquired business expands workflow orchestration capabilities within the enterprise agentic suite, integration can strain near-term expenses, and the company must demonstrate that cost synergies and cross-selling opportunities can materialize at the pace of management projects.
Valuation also remains a sticking point. SoundHound trades at approximately 21.5X forward 12-month sales, above the industry’s 16.54X and above its own three-year median. Although the market may justify a premium for an emerging AI platform with strong growth momentum, the mismatch between the valuation multiple and the company’s loss profile raises concerns about downside exposure if revenue momentum slows.
SOUN’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Analyst estimates revisions offer a mixed but cautious picture. The Zacks Consensus Estimate for SOUN’s loss per share for 2025 remains unchanged, whereas 2026 loss estimates have widened slightly, even as revenue projections continue to rise almost 100% for 2025 and nearly 39% for 2026. This combination of solid sales forecasts and softening earnings expectations underscores the investment tension — the top line is accelerating, but the bottom line has yet to follow.
SOUN’s Sales Estimate
Image Source: Zacks Investment Research
SOUN’s EPS Estimate
Image Source: Zacks Investment Research
Competition Intensifies as Voice and Agentic AI Markets Expand
Competition in voice and agentic AI is tightening, adding pressure to SoundHound’s recent stock performance. Nuance Communications — owned by Microsoft (MSFT - Free Report) — remains a powerful rival, and Nuance dominates healthcare and contact-center deployments. Nuance consistently sets industry standards around accuracy and conversational quality, keeping competitive pressure high. Cerence (CRNC - Free Report) is another major contender, and it continues to lead automotive voice systems with strong OEM partnerships. Cerence still shapes the embedded voice market SoundHound aims to disrupt. LivePerson (LPSN - Free Report) also challenges SoundHound, and it competes aggressively in enterprise automation. LivePerson increasingly positions itself as a full-stack agentic AI provider, intensifying the rivalry.
Bargain or Red Flag?
The recent selloff reflects an uneasy balance between SoundHound’s extraordinary growth and its persistent financial risks. On the upside, the company is scaling rapidly across diverse industries, raising expectations for the current year and reinforcing its leadership in advanced conversational AI. Its foundation in proprietary speech models, rapidly expanding enterprise partnerships and strengthened cross-industry deployments form a compelling long-term narrative.
Yet the cautionary view is equally grounded. The stock’s technical breakdown, combined with widening operating losses, heavy cash usage, acquisition-related complexity and a valuation premium, suggests the path forward may be volatile. The Zacks Rank #4 (Sell) captures this discomfort, highlighting negative earnings momentum despite SoundHound’s strong revenue outlook.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.