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SoundHound AI (SOUN) has declined 45% in the past month after delivering explosive gains through 2024 and into early 2025. It held onto most of those gains until news broke out that Nvidia (NVDA) sold its entire stake in the company. This was a big setback for SoundHound AI since many analysts called it a “Nvidia-backed investment.”
However, it’s not all doom and gloom for SoundHound. It is now down 61% from its peak, and given half of that decline has been for external reasons, looking at the company’s fundamentals to reassess whether or not it’s a buy is a good idea. Feb. 27 could prompt investors to do just that. Here’s why.
SoundHound AI Is Set to Report Q4 Earnings
SoundHound AI will report its Q4 and full-year earnings on Feb. 27 after market close. Analysts expect SoundHound to report a per-share loss of $0.11, down 83.3% year-over-year. Projections of a loss per share of $0.38 for 2024 imply flat year-over-year performance, and analysts then call for a 29% improvement in 2025.
The company reported a loss of $0.06 per share in earnings in the third quarter, beating analyst estimates of -$0.08 per share. This kickstarted a 216%-plus rally over the next two months. If the company beats estimates again, it may start a recovery rally.
Analysts also expect $33.7 million in revenue, up 96.5% year-over-year. They expect the top-line growth to accelerate more in the first quarter of 2025 with 196.2% year-over-year growth. SoundHound’s Q3 performance showed 89% year-over-year revenue growth to $25 million, with significant improvement in customer diversification (only 12% of revenue coming from its largest customer compared to 72% in the prior year).
What SoundHound Itself Expects
SoundHound AI itself provided some guidance for the fourth quarter.
Its quarterly revenue for 2024 so far is:
- Q1 2024: $11.6 million
- Q2 2024: $13.5 million
- Q3 2024: $25.1 million
Total revenue for the first three quarters of 2024: $50.2 million.
SoundHound has updated its full-year 2024 revenue guidance to a range of $82 million to $85 million.
Therefore, the implied Q4 2024 revenue estimate would be:
- Low end: $82 million - $50.2 million = $31.8 million
- High end: $85 million - $50.2 million = $34.8 million
This means SoundHound AI is projecting Q4 2024 revenue to be between $31.8 million and $34.8 million. The midpoint at $33.3 million would miss current estimates.
It expects 2025 revenue to be between $155 million and $175 million. If it updates these numbers on Feb. 27, that would be another positive catalyst for SOUN.
Wall Street Sentiment for SOUN Stock
SOUN stock still trades at an expensive multiple of 43 times sales and remains deeply unprofitable. Paying this much isn’t that unusual for an AI startup, and considering the growth rates, many on Wall Street think it could go a lot higher from here.
The mean price target for SOUN stock of $14.50 implies roughly 63% upside potential. Its high price target of $26 suggests could nearly triple over the next 12 months.
That said, analysts are still split. SOUN stock is tagged as a “Moderate Buy” currently, with three “Hold” and three “Strong Buy” ratings from the six analysts covering the stock.
