Should You Buy SoundHound AI At $10?

July 2nd, 2025 by Trefis Team

SoundHound AI (NASDAQ:SOUN), a voice AI platform enabling businesses to deliver conversational AI experiences, has recently witnessed a steep stock decline, falling nearly 50% year-to-date to $10. A significant portion of this drop occurred in January, driven largely by investor disappointment following the Consumer Electronics Show (CES). The stock has yet to show any meaningful recovery since then.

From a valuation standpoint, SoundHound AI stock still appears overvalued. Several factors contribute to this view, particularly in light of its elevated valuation. Our assessment is grounded in a thorough comparison of SOUN’s current valuation with its recent operating performance and financial history.

Our detailed analysis of SoundHound AI—examining key areas such as Growth, Profitability, Financial Stability, and Resilience during downturns—suggests the company has shown only moderate operational results and financial standing. These aspects collectively raise concerns about the stock’s attractiveness at current levels. That said, if you’re looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative—it has outperformed the S&P 500 and delivered returns exceeding 91% since inception. Also see – What’s Happening With WOLF Stock?

How Does SOUN Stock’s Valuation Look vs. The S&P 500?

Looking at price relative to sales or profits, SOUN stock appears very expensive compared to the broader market.

  • SoundHound AI has a price-to-sales (P/S) ratio of 43.5 versus 3.1 for the S&P 500

How Have SoundHound AI’s Revenues Grown Over Recent Years?

SoundHound AI’s Revenues have expanded significantly in recent years.

  • The company’s revenue has grown at an average annual rate of 69.0% over the last three years (compared to 5.5% for the S&P 500)
  • Its revenue surged 101.4% from $51 million to $102 million over the past 12 months (vs. 5.5% for the S&P 500)
  • Quarterly revenues increased 151.2%, reaching $29 million in the most recent quarter from $12 million a year earlier (vs. 4.8% for the S&P 500)

How Profitable Is SoundHound AI?

SoundHound AI’s profitability metrics are substantially worse than most companies tracked by Trefis.

  • Operating Income over the last four quarters stood at $-142 million, representing a very poor operating margin of -139.2%
  • Operating Cash Flow (OCF) was $-106 million during this period, indicating a very poor OCF margin of -103.8% (vs. 14.9% for S&P 500)
  • Net Income came in at $-188 million for the same timeframe—translating to a very poor net income margin of -183.6% (vs. 11.6% for the S&P 500)

Does SoundHound AI Look Financially Stable?

SoundHound AI’s financial condition appears very strong.

  • Debt was $4.6 million as of the latest quarter, with a market cap of $4.0 billion (as of 6/16/2025), reflecting a very strong Debt-to-Equity Ratio of 0.1% (vs. 19.4% for the S&P 500). [A low Debt-to-Equity Ratio is generally favorable]
  • Cash and equivalents totaled $246 million out of $588 million in total assets—resulting in a very strong Cash-to-Assets Ratio of 41.8%

How Resilient Is SOUN Stock During A Downturn?

SOUN stock has underperformed the S&P 500 during several recent downturns. With hopes pinned on a soft landing for the U.S. economy, what happens if another recession hits? Our dashboard How Low Can Stocks Go During A Market Crash analyzes how key stocks fared during and after the past six market crashes.

Inflation Shock (2022)

  • SOUN stock declined 93.6% from a high of $14.98 on May 5, 2022, to $0.97 on December 22, 2022, compared to a 25.4% decline for the S&P 500
  • The stock fully recovered to its pre-crisis peak by December 6, 2024
  • It later climbed to a high of $24.23 on December 26, 2024, and currently trades at approximately $9.70

Putting All The Pieces Together: What It Means For SOUN Stock

In conclusion, SoundHound AI’s performance across various metrics is summarized below:

  • Growth: Extremely Strong
  • Profitability: Extremely Weak
  • Financial Stability: Extremely Strong
  • Downturn Resilience: Extremely Weak
  • Overall: Neutral

Despite the neutral rating, we believe SoundHound AI’s elevated valuation renders the stock unattractive at present. Of course, there’s a chance we’re wrong—investors might be willing to pay a high multiple based on SOUN’s aggressive revenue growth, particularly after its acquisition of Amelia. However, the risk at current levels seems elevated. At Trefis, we incorporate risk into our strategy for building the High Quality (HQ) Portfolio, which consists of 30 stocks and has a strong track record of outperforming the S&P 500 over the past four years. Why? Collectively, HQ Portfolio stocks tend to offer higher returns with lower risk relative to the benchmark—delivering a smoother ride, as shown in our HQ Portfolio performance metrics.

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