SoundHound AI (SOUN 1.38%) has been a poor funding in 2025, following an amazing 2024. It is down 35% this yr, in comparison with hovering 835% final yr. Nonetheless, I believe a turnaround for SoundHound AI could possibly be on the best way.
SoundHound AI has some robust tailwinds blowing in its favor, and it could possibly be a monster winner within the second half of the yr, particularly if the expansion figures that administration initiatives come true.
Picture supply: Getty Pictures.
SoundHound AI is placing up spectacular progress figures
SoundHound AI is a frontrunner in audio recognition expertise, utilizing this info to combine with generative AI fashions. Voice-activated AI fashions have been round for a very long time (assume Siri or Alexa), however typically pissed off customers. SoundHound AI’s product represents a major enchancment over these applied sciences, outperforming human counterparts in each accuracy and velocity.
Extra folks may be open to utilizing AI to exchange many elements of their lives if it meant a faster and extra seamless expertise, however that hasn’t typically been the case. In consequence, the final inhabitants could also be considerably skeptical of SoundHound’s product, however its fast progress tells a distinct story.
Within the first quarter, SoundHound AI’s income rose a powerful 151% yr over yr to $29.1 million. Administration additionally maintained its full-year steerage of 97% year-over-year progress, which locations its progress fee among the many quickest within the AI realm. Nonetheless, it is uncommon to see a inventory delivering that stage of outcomes with a declining share value. That could possibly be as a result of traders are involved that an excessive amount of progress is already priced into the inventory.
SoundHound AI’s inventory is not low cost. It trades for 41 instances gross sales.
SOUN PS Ratio knowledge by YCharts. PS = price-to-sales.
This stage is nicely beneath the place it peaked on the finish of 2024, but in addition above the place it traded all through most of 2024. Nonetheless, 41 instances gross sales might be an affordable value to pay for the inventory — if it may well keep its near-100% income progress tempo (which is extremely tough to do).
If SoundHound AI can keep its doubling progress tempo, the inventory might be valued at round 20 instances gross sales after one yr of progress, which is the excessive mark for many software program corporations. I believe that SoundHound AI can ship robust progress within the second half of 2025 and all through 2026, particularly if it begins to transform a few of its backlog.
Administration might reveal what its anticipating in 2026 quickly
On the finish of 2024, SoundHound AI’s income backlog (a measure of how a lot worth stays on contracts that it has signed) was $1.2 billion. Since SoundHound AI’s trailing 12-month income simply eclipsed $100 million, this means monster progress forward for the corporate.
Whereas administration was unwilling to vary its 2025 steerage throughout Q1, there are clear indicators that SoundHound AI’s 2026 progress could possibly be simply as robust as its 2025 progress. The market is not prepared for this proposition, and if administration hints that 2026 progress might be simply as fast as 2025’s, the inventory might surge in consequence.
We do not have a date for SoundHound AI’s second-quarter outcomes, however final yr’s Q2 outcomes had been accessible in early August. I will be watching SoundHound AI’s inventory throughout that timeframe and paying shut consideration to what administration has to say about 2026. They dropped hints concerning 2025’s projections through the Q2 2024 convention name, and I anticipate them to do the identical this yr.
SoundHound AI’s audio recognition product is being extensively adopted, with many corporations having already signed a cope with SoundHound. Now, SoundHound AI is working to acknowledge that income, which might end in vital progress for each the corporate and its inventory.
Keithen Drury has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
