SoundHound AI: Buy or Sell in 2026?

For its size, AI SoundHound (HER +6.62%) attracts a lot of attention. The company has a market capitalization of just $4.5 billion, but its average trading volume exceeds 21 million shares, more than double the trading volume of other stocks with a similar market capitalization.

One of the reasons SoundHound is gaining attention is its position in the rapidly growing field of artificial intelligence (AI). SoundHound’s AI platform allows users to engage in conversations with voice-enabled services and applications.

It also gained attention in 2024, when Nvidia revealed that it had taken a stake in the company in a previous private venture capital round. And even though Nvidia sold that stake over a year ago, SoundHound still has investors’ attention.

Today, SoundHound stock trades at around $11 per share and the stock price is down 38% over the past year. However, it is quickly expanding its customer base to include technology companies, automakers and restaurants, and has a strong cash flow with no debt. Should it be part of your investment portfolio in 2026?

What does SoundHound AI do?

SoundHound AI has many applications, including automotive, restaurants, voice commerce, and a music app that identifies music whether it is being played or hummed. SoundHound customers can create personalized AI-powered voice assistants to handle incoming calls, integrate brand-specific information into products, and use custom voice AI products. It can also be used for internal projects, like providing employees with voice access to manuals and training.

SoundHound’s AI platform is capable of listening, reasoning and acting, with a median latency of just 350 milliseconds. And it’s designed to work with all kinds of big language models, including those offered by Mistral AI, OpenAI, and Anthropic. The company currently holds over 400 patents, securing its leading position in the field of voice AI.

Its main automatic voice recognition (ASR) product is Polaris, which enables greater automation through AI-based omnichannel control, meaning it can handle drive-thru kiosks, phone calls, text messages, analytics or voice commands. “Polaris, in our view, represents another significant disruption that widens the gap between us and the competition on our journey to realizing SoundHound’s vision,” said CEO Keyvan Mohajer.

Today, SoundHound says it has signed contracts with 7 of the world’s 10 largest financial institutions and signed a new agreement with an unnamed Chinese company to integrate SoundHound Chat AI into millions of AI-enabled smart devices, initially distributed in the Indian market.

It has other contracts with health care companies, insurers, energy companies, health clubs and numerous restaurants, including White Castle, Chipotle Mexican Grilland Five Guys.

“Some of the world’s largest companies look to us for solutions to achieve their AI goals,” Mohajer said. “We are at the very beginning of exploring the enormous market opportunity before us.”

Why is the stock falling?

With everything happening at a rapid pace, you might think that SoundHound stock is an opportunity not to be missed. And yes, the stock is up 929% over the past three years, despite relative weakness over the past 12 months.

Part of the problem is that SoundHound is suffering heavy losses. Although third-quarter revenue was a record for the company at $42 million (up 68% from last year), SoundHound reported a net loss of $109.2 million and a loss per share of $0.27.

This is largely due to data center costs and acquisitions as the company continues to grow, but absorbing these types of losses is troubling for investors. But management expects full-year revenue to be between $165 million and $180 million, and fourth-quarter losses to be less than $10 million. “We anticipate additional acquisition cost synergies of approximately $20 million on an annual basis to be more fully realized in 2026, which will position us well as we align our organization with the enormous tailwinds supporting us,” said CFO Nitesh Sharan.

There’s no doubt that creating innovative technologies like what SoundHound is deploying costs a lot of money. And the work he does is impressive. Its latest product, announced Jan. 5, includes an agentic AI platform that can perform tasks such as checking email, adjusting schedules, booking flights and hotels, and making restaurant reservations.

I wouldn’t expect an immediate improvement in SoundHound stock. But I think it’s a good opportunity to buy a compelling business that’s starting the year at a discount. If the company can cut its losses and move toward profitability, the stock will likely continue its upward trend in 2026.