SoundHound AI, Inc. SOUN has been on a sharp upward trajectory since reporting its second-quarter 2025 results on Aug. 7. Shares have rallied 49% in the past week, far outpacing the Zacks Computers - IT Services industry and the broader Zacks Computer & Technology sector.
SoundHound AI reported record Q2 revenues, but guidance for the second half of 2025 was weaker, raising concerns about sustainable growth. The company continues to report limited organic growth, with much of the recent revenue boost attributed to acquisitions rather than core business expansion. Despite a $6.5 billion valuation and claims of a large pipeline, actual progress in key verticals like restaurants and autos appears slow and unclear.
SOUN's NRR soars to 120% in Q2, fueled by acquisitions, tech upgrades, and cross-selling across its AI portfolio.
SOUN's surging sales, Vision AI launch, and expanded automotive deals fuel optimism for strong voice AI growth.
Recently, Zacks.com users have been paying close attention to SoundHound AI (SOUN). This makes it worthwhile to examine what the stock has in store.
SoundHound AI's record Q2 revenue surge and raised outlook spark optimism despite fierce competition and ongoing losses.
One of the most important questions investors need to ask during and after an earnings announcement for a stock is whether growth has been priced in or not. Typically, the days after a stock moves on earnings are when broader market participants attempt to land on a fair price that reflects the important information they've just received, and that is where some will fall off the track.
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
SoundHound AI's revenue growth is impressive, with potential for upside surprises in FY25 as the management may be low-balling guidance. Stock-based compensation remains high despite multiplier revenue growth, raising concerns about minority shareholder interests taking a backseat over the company's employees. Management is targeting adjusted EBITDA profitability by the end of the year, but I don't believe this as the company has a track record of missing on EBITDA expectations.
SoundHound AI's automotive business is driving impressive revenue growth, with new global partnerships and a proprietary tech edge fueling optimism. The company's Voice AI platform shows strong differentiation, supporting expansion into new verticals and potential for improved profitability over time. Despite stellar results, growth may not be sustained every quarter, and the very high valuation premium warrants caution for investors.
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SoundHound AI Inc (NASDAQ:SOUN) stock is one of the best tech stocks out there today, up 25.4% to trade at $13.45.