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Shares of voice artificial intelligence (AI) solutions provider SoundHound AI (SOUN) have dropped 30% in the year-to-date. Further, SOUN stock has lost 48.8% of its value from its 52-week high of $24.98. This significant downturn doesn’t seem to stem from any company-specific developments. Instead, broader macroeconomic uncertainties and the stock’s high valuation have weighed heavily on its performance.
To understand the recent decline, it’s crucial to look at SoundHound’s incredible run in 2024. The stock skyrocketed by an astounding 835.9%. This growth came after AI chip giant Nvidia (NVDA) disclosed a stake in the company, which boosted investor confidence. Further, the growing demand for SoundHound’s voice AI solutions in sectors like restaurants, customer service, and automotive, as well as the market’s heightened enthusiasm for AI-related stocks further contributed to its meteoric rise.
SoundHound’s rapid ascent drove its valuation significantly higher, setting the stage for the recent correction. While the stock has pulled back considerably, its valuation remains elevated.
The path forward hinges on SoundHound’s ability to deliver exceptional financial performance. Strong growth and solid execution could pave the way for a recovery in its share price. Conversely, any signs of slowing momentum could trigger another wave of selling, as the market is likely to react sharply to any disappointments.
Can SoundHound Maintain Momentum?
The growing demand for AI-enabled services across diverse industries sets SoundHound on a promising growth trajectory for 2025. With a scalable platform and constant demand, the company is well-positioned to deliver robust revenue and adjusted EBITDA growth, which will support the recovery in its stock price.
SoundHound is uniquely positioned to tap into the expansive enterprise AI market, offering significant opportunities. Its leadership in voice AI technology and its proprietary tech stack positions the company as a go-to partner for businesses looking to streamline operations and elevate customer engagement. As enterprises continue ramping up investments in AI, SoundHound’s innovative solutions will likely gain further traction.
The company is leveraging its expertise to enter new verticals with AI-powered customer service solutions. These solutions are now embedded in the operations of hundreds of enterprise brands. As the company rapidly penetrates end markets that are projected to grow significantly in the coming years, it is building an ecosystem of customers and partners who are increasingly using its technology. This expanding portfolio positions SoundHound to capitalize on the growing reliance on AI-powered solutions.
SoundHound’s customer service AI agents are now deployed across a range of industries. The company’s presence in the automotive sector continues to grow, particularly thanks to the electric vehicle (EV) market. It won a significant deal with a new EV OEM in the Middle East in the third quarter. Similarly, its footprint in financial services is expanding rapidly, fueled by greater adoption of its innovative offerings. All these factors indicate that the company’s growth could accelerate in 2025.
What’s Ahead for SOUN Stock?
Wall Street analysts have a “Moderate Buy” consensus rating on SOUN stock.
However, SoundHound is well-positioned for future growth, driven by strong demand for its solutions, an expanding customer base, a large addressable market, and opportunities in new verticals such as energy and deeper penetration into retail. These factors provide a solid foundation that could support a recovery in its share price from current levels.
The company continues to scale its existing business and is integrating recent acquisitions, which it expects will generate significant revenue synergies. Additionally, SoundHound anticipates solid opportunities for upselling and cross-selling across its portfolio.
Thanks to the ongoing momentum in its business, management projects that its top line will reach between $155 million and $175 million in 2025, up from the projected $82 million to $85 million in 2024, reflecting an acceleration in its growth rate. Furthermore, cost-control measures and portfolio rationalization are expected to enhance its ability to focus on high-growth investments and will likely drive its stock higher.
