SoundHound AI Presents Year of Two Halves – Has The Stock Found a Bottom?

SoundHound AI, Inc. (NASDAQ: SOUN) continues to capture interest, yet remains a volatile play in the artificial intelligence space. As of this morning, the SoundHound's stock price is at $10, up 1.7% in the pre-market, and adding to the 3.48% gain in the last trading session.

The past year has been exceptional for SoundHound, with the stock surging 150%, reflecting the market's enthusiasm for AI-driven companies. This impressive run has seen the stock test extreme highs, reaching $24.98 in late December 2024, yet the direction since the start of this year has mainly been to the downside, with a 51% drop. Volatility can be expected in spades, with a 12 months of two halves.

Let's take a look at some of the recent fundamental developments that have contributed over the year.

Nvidia's February 2024 investment, acquiring 1.73 million shares valued at $3.67 million, served as a major validation of SoundHound's voice AI capabilities, triggering a notable stock surge.

The August 2024 acquisition of Amelia, a conversational AI firm specializing in customer service for sectors like healthcare and finance, further bolstered SoundHound's position. This acquisition is projected to bring in over $45 million in recurring AI software revenue by 2025 and has positioned SoundHound as a leader in enterprise conversational AI, particularly in healthcare.

SoundHound has also been actively forging partnerships to expand its reach. The introduction of its Chat AI Automotive voice assistant in Japan, adopted by Stellantis' DS Automobiles, marks a significant step in integrating generative AI into vehicles. Furthermore, a partnership with Church's Texas Chicken to deploy voice AI for drive-thru orders demonstrates the company's commitment to streamlining operations for restaurants.

Financially, SoundHound reported a revenue of $29.1 million in the first quarter of 2025, a 151% year-over-year increase, helped in no small amount by strategic acquisitions and market expansion.

However, concerns remain regarding SoundHound's valuation. The price-to-sales ratio (P/S) of 90x is significantly above the sector average, which accounts for some of the price volatility.

Analysts' 12-month price targets range from $8 to as high as $18, demonstrating the difficulty in splitting the bulls and bears on this one. While some analysts hold bullish views, the high P/S ratio suggests that the stock's current price may already reflect much of its future growth prospects. The average price target of $11.81 continues to indicate perceived upside of more than 18% from the current price action, leaving scope for growth according to the street.

With SOUN having bounced off the $9 level in recent weeks, the question as to whether a near term bottom in place again rears it's head. Whilst the stock has dipped below this level, buyers have stepped in. Yesterday's move coming on volume of more than 48million shares represented a strong appetite amongst buyers, with the average daily volume of ~25million being firmly beat.

Further volatility can be expected, although the street seems to be increasingly coming around to the bull's perspective, with targets moving to the upside.