SoundHound AI (NASDAQ: SOUN) is showing impressive growth but its stock price has struggled this year. The company reported a remarkable 151% increase in revenue in the first quarter compared to last year. Despite this, its shares have dropped nearly 50% so far in 2025 and have not bounced back like many other tech stocks.
SoundHound AI offers advanced audio recognition technology. It helps businesses use voice commands with large language models, which are the backbone of generative AI.
This is important because most AI models respond to typed text, but voice input can be easier in many situations. The company’s technology is used in restaurants for online orders and drive-thrus, as well as in car digital assistants. It serves many industries, giving it a wide customer base.
For the full year, SoundHound expects revenue between $157 million and $177 million, which would be about 97% growth. Although it is not yet profitable, the company aims to reach adjusted EBITDA profitability by the end of 2025. This means it expects to cover its operating costs before interest, taxes, depreciation, and amortization—a key step toward full profitability.
However, the stock is expensive. Its price-to-sales (P/S) ratio is about 41, much higher than the typical 10 to 20 range for software companies.
This high valuation reflects the company’s rapid growth. If SoundHound doubles its revenue in 2025 as expected, the P/S ratio could fall to around 20, making the stock more reasonably priced if the share price stays the same.
Few Wall Street analysts cover SoundHound, and their revenue estimates are lower than the company’s own forecasts. This adds uncertainty about the stock’s future performance.
SoundHound AI could rise sharply if it continues strong growth, but any setbacks could cause big drops in its stock price. This makes it a high-risk, high-reward investment. Investors should consider keeping any position small to manage risk.
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