The artificial intelligence (AI) stock has lost nearly half its value this year, but its sales have been growing rapidly.
AI SoundHound (HER +3.51%) is a voice artificial intelligence (AI) company that has attracted investor attention after the tech giant Nvidia revealed in early 2024 that it had taken a stake in the company. At that point, the stock crashed, rising 836% that year.
The story was much different in 2025. Nvidia sold its position in SoundHound AI in the fourth quarter of 2024, and now, after a roller coaster year, AI stock is down about 55% from the high it hit in January. Although SoundHound AI’s entire stock performance does not depend on Nvidia’s investment in the company, it is also difficult to underestimate the effects.
Will 2026 be a year where SoundHound AI bounces back and convinces investors based on its own merits and fundamentals, or will it continue to struggle?
Image source: Getty Images.
Sales have increased, but the results still need a lot of work
Given SoundHound AI’s impressive revenue growth over the past year, it might seem at first glance a bit surprising that the stock is doing so poorly. But the raw numbers hide some problems under the hood.
SOUN turnover (quarterly growth over one year) data by Y charts.
The first is that the business has grown primarily through acquisitions. Last year it bought AI company Amelia, which not only increased its revenue but also allowed it to be present in many different sectors. Until then, SoundHound AI’s lack of revenue diversification was a major concern, as the company relied heavily on automotive customers.
The second problem is that while the company has grown its business significantly, its trajectory toward profitability has not improved as much. In the third quarter, its adjusted net loss was $13 million, an improvement from a loss of nearly $15 million in the year-ago period, but that 13% improvement was a far cry from the 68% revenue growth it achieved. To convince investors that it’s a good buy, he’ll probably have to cut his losses significantly.
The stock’s valuation still seems high
Despite the stock dropping in 2025, SoundHound AI isn’t exactly a bargain. It has not returned all the gains made in 2024. And its market capitalization of around $4.5 billion is more than 7 times what it was valued at two years ago.
Even when you factor in its revenue growth, it’s hard to make the case that the stock is cheap. Over the past two quarters, its sales have been about $42 million. If you assume they will remain consistent, that would result in annualized revenue of around $168 million. And with a market capitalization of $4.5 billion, that values the stock at a price-to-sales multiple of 27.
That’s a high premium for a company that’s unprofitable and growing primarily through acquisitions.
Today’s change
(3.51%) $0.39
Current price
$11:50 a.m.
Key Data Points
Market capitalization
$4.7 billion
Daily scope
$11.17 -$11:55 a.m.
52 week range
$6.52 -$24.98
Volume
5.1 million
Average flight
44M
Gross margin
30.02%
Can SoundHound AI Stock Rebound in 2026?
The main questions surrounding SoundHound AI are to what extent the company can grow organically and whether it can turn a profit in the near future. Unless the answers to both questions are favorable, I don’t think the stock will see a strong rally next year.
Indeed, given its exaggerated valuation, I think there is a good chance that the stock will see an even greater decline. If you’re interested in SoundHound AI, you may want to be patient and take a wait-and-see approach with the stock, as the company still faces considerable challenges.
