Shares of SoundHound AI, Inc. (NASDAQ: SOUN) fell 1.5% on Tuesday as the stock continues to battle key technical trends ahead of its next major catalyst. Despite the minor pullback, the underlying technical setup suggests that SoundHound could be preparing for a big breakout.
Over the past month, SoundHound shares have shown resilience, rallying sharply from the April 7 low of $6.50.
Importantly, the current rebound has pushed the stock back above two critical technical levels: the 50-day and 200-day moving averages.
The 200-day moving average is a widely followed indicator of a stock’s long-term trend. SoundHound’s ability to reclaim this level hints that bullish momentum may be rebuilding.
Meanwhile, the 50-day moving average has shifted into a neutral trend, which could turn higher if recent strength continues.
The company's upcoming earnings report, scheduled for release on May 8, could provide the spark SoundHound needs to break decisively higher.
Last quarter, the company reported its strongest revenue growth since going public in 2022, with a 101% year-over-year increase.
Notably, it marked the fourth consecutive quarter that SoundHound beat analysts' revenue expectations. The company also exceeded earnings forecasts by $0.05, posting a narrower-than-expected loss of $0.10 per share.
Historically, the stock has a strong performance trading after its earnings reports as the stock moves higher 63% of the time. On average, SoundHound’s bullish post-earnings moves results in an average performance of 98.8% over the following two weeks.
Fundamentally, SoundHound has been building momentum beyond just the numbers.
Based in Santa Clara, California, the company specializes in voice artificial intelligence, developing independent voice AI solutions for industries like automotive, IoT (internet of things), restaurants, customer service, healthcare, and retail.
The company’s product suite—featuring technologies like Chat AI, Smart Ordering, and Voice Commerce systems—positions it well for long-term growth as voice technology becomes increasingly integral across industries.
But beyond the technicals and fundamentals, the $10 price level now stands out as the next major battleground for investors.
Psychologically, $10 is an important round-number resistance that often acts as a dividing line between a “speculative small cap” and a more serious investment opportunity.
The last time SoundHound broke above $10—in December 2023—the stock quickly surged to $25 before eventually retreating.
It needs to be noted that this was just four months ago when the “risk-on” trade and speculative interest in the market and AI service companies was running much higher. The market’s current bearish trends have subdued stock performance in names like SoundHound.
Another breakout above $10 could trigger a wave of technical buying, particularly from algorithms and swing traders who track round-number breakouts.
With sentiment improving, strong recent revenue growth, and a bullish technical picture forming, SoundHound AI is shaping up as a stock to watch closely heading into earnings.
That said, investors should also remain cautious. Shares have been volatile, having dropped nearly 75% from their prior peak earlier this year.
Any disappointment in next week's earnings report could send the stock back into its previous trading range towards $7.50.
Still, the combination of improving technicals, accelerating growth, and an upcoming earnings catalyst makes SoundHound a potential breakout candidate in the volatile AI sector. Traders and investors alike will be watching closely to see if history is ready to repeat.
SoundHound AI shares remain in a long-term bullish trend with a price target of $12.50.
