SoundHound AI (SOUN) put on a clinic in 2024. It went from penny stock territory to market darling, gaining 1,024% in just one year. SOUN shares tripled in December alone.
The conversational AI tech stock's performance so far this year has been underwhelming. Its stock is down 20% in 2025 and off some 36% from its all-time high. While it regained some lost territory from recent lows, Wall Street doesn't quite buy into SoundHound being a phoenix and rising from its ashes.
While the consensus price target implies it will lose another 22% this year and one analyst foresees SOUN plunging as much as 44% from its current level. Does Wall Street have it wrong, and SoundHound AI is ready for another leg up, or is this stock doomed to crash?
Best-known for its music identification app, SoundHound's natural language AI technology is finding a home in numerous real-world applications. From SiriusXM Holdings (SIRI) Pandora streaming music service to automotive giant Stellantis (STLA), SoundHound's technology is being incorporated into their products. Its technology powering voice assistants, smart devices, and enterprise platforms.
That is showing up in SoundHound's financials. Third-quarter revenue jumped 89% from the year-ago period to $25.1 million as it diversified its customer base away from one customer accounting for 72% of revenue to 12% today.
Depending upon who is counting, the global market for voice and speech recognition technology will grow at a speedy 14.6% compound annual growth between now and 2030. Speech recognition will account for two-thirds of the increase.
Despite a leading position in the space, there are troubling warning signs too.
SoundHound AI has never been profitable. Since its founding in 2005, the voice recognition company has yet to find the magic formula for producing profits and the situation is worsening. Despite a rapid rise in sales, adjusted losses widened to $15 million, from $13 million in the year-ago period while adjusted EBITDA losses more than doubled to $15.9 million from $7.3 million. Operating losses also doubled year-over year.
Much of the gains SOUN stock gained last month were likely the result of a short squeeze. Over 27% of its float was sold short in mid-November and short-sellers are still betting heavily against it with nearly a quarter of its shares outstanding sold short.
The market wasn't enthused about its new technology offerings unveiled at the Consumer Electronics Show earlier this month. Rather than something revolutionary, it debuted an in-vehicle voice assistant to let you order takeout for pick-up from the car. It didn't move the ball very far down the field.
Ladenburg Thalmann analyst Glenn Mattson downgraded SOUN stock from buy to neutral while maintaining a $7 per share one-year price target. Based on SoundHound's price melt-up, coupled with larger than expected losses, he thinks the stock is significantly overvalued.
SOUN is still feeling the effects from a string of acquisitions it made over the past year, the latest being Amelia AI in August. While they could position it for future growth and expand into new verticals, they are hurting margins and profitably, and don't justify SoundHound AI's premium.
