SoundHound Stock Surges 55%: Is it Time to Invest?

SoundHound AI (SOUN) has shown a remarkable 55% surge in its stock price over the past three months, outperforming the S&P 500 and industry sectors. Despite this, the stock remains below its 52-week high. The company’s revenue growth is driven by acquisitions and its innovative Polaris foundation model supporting multi-modal voice AI. Additionally, SoundHound is expanding into voice commerce and enterprise sectors.

SoundHound has diversified its customer base beyond automotive, with promising renewals and expansions in various industries. The Amelia 7.0 platform enables businesses to deploy AI agents for complex tasks, positioning SoundHound as a key player in Agentic AI. The company is seeing operational momentum with a significant rise in cloud users and voice queries handled.

While SoundHound’s growth story is strong, its valuation remains a concern with a high forward P/S ratio. The company is yet to achieve profitability, reporting losses in the first quarter of 2025. Management aims for revenue growth and EBITDA profitability by the end of 2025. Competitively, SoundHound faces challenges from tech giants like Alphabet, Amazon, and Apple in the voice AI space.

Investors should consider SoundHound’s strong technology and customer traction, but elevated valuation and operating losses present risks. The stock may be suited for patient investors, with potential upside dependent on margin expansion and earnings revisions. With a Zacks Rank #3 (Hold), new investors may want to wait for clearer financial improvement signals before entering the stock.

Read more at Nasdaq: SoundHound Stock Jumps 55% in 3 Months: Should You Still Buy Now?