SoundHound AI (NASDAQ:SOUN) Stock Price Slides to $13.17 Despite Explosive Revenue Growth
Shares of SoundHound AI tumble amid inflation fears, even as revenue surges 217% YoY, guidance nears $178M, and QSR deals expand to 14,000+ restaurants | That's TradingNEWS
Revenue Growth Surges but Stock Retreats to $13.17
SoundHound AI (NASDAQ:SOUN) delivered one of its most impressive quarters to date, reporting Q2 revenue of $42.7 million, representing a 217% year-over-year increase. Despite the revenue explosion, shares closed at $13.17, down over 10% in a single session as investors digested valuation risks and macro pressures. The stock had been trading as high as $15.40 earlier in August, fueled by AI hype, before sellers regained control after earnings.
Guidance Raised to $178 Million as Growth Accelerates
Management upgraded full-year revenue guidance to $160 million–$178 million, a sharp increase from its earlier forecast of around $140 million. At the midpoint, this implies a full-year growth rate of over 150%, placing SoundHound among the fastest-growing pure-play AI firms. If achieved, the company would exit 2025 at an annualized run rate near $200 million, pushing it toward enterprise-grade scale in the AI voice market.
QSR Expansion Strengthens Recurring Revenue Stream
The most striking operational milestone is SoundHound’s penetration into the quick-service restaurant (QSR) industry, where it now services over 14,000+ locations. Contracts with top-tier chains are embedding SoundHound’s technology directly into drive-thru and order-taking infrastructure, providing sticky recurring revenue. At scale, this could mirror the SaaS multiple re-ratings seen in firms like Toast (NYSE:TOST) and Olo (NYSE:OLO), though with stronger AI integration.
Valuation Premium Creates Debate
At $13.17, SoundHound carries a market capitalization just under $4.0 billion, translating to a price-to-sales ratio of roughly 22x based on the upper end of 2025 guidance. This valuation is rich compared to legacy software peers, but in line with early-stage AI firms that are showing hypergrowth. Bulls argue that sustained 200%+ revenue growth justifies the premium, while bears counter that profitability remains elusive, with gross margins around 72% but net losses still in the $40 million range per quarter.
Technical Landscape: 12.80 Support, 15.00 Resistance
From a technical perspective, SOUN has established a short-term support zone at $12.80, with further downside protection around $11.60, levels flagged by institutional desks as buy zones. On the upside, bulls need to reclaim $14.50–$15.00 resistance before momentum traders re-engage. A breakout above $15 would target $17.80–$18.00, a level last seen during June’s AI rally. RSI readings remain neutral near 54, suggesting the selloff has not yet triggered oversold conditions.
Macro Headwinds Pressure AI Valuations
Broader equity markets have turned risk-averse, with rising Treasury yields dragging speculative tech lower. The 10-year U.S. yield has rebounded to 4.25%, reducing appetite for unprofitable growth firms. Yet, unlike many small-cap peers, SoundHound benefits from real, contracted revenue with enterprise clients. Its exposure to QSR automation, automotive voice AI, and enterprise software integrations gives it multiple levers to offset cyclical risk.
Strategic Risks and Competitive Dynamics
SoundHound’s long-term thesis rests on voice AI becoming a mainstream interface across industries. However, competition looms. NVIDIA (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) are embedding voice AI within larger ecosystems. The risk for SOUN is being out-scaled by these giants. Yet, its specialized focus in QSR and automotive, markets worth billions annually, gives it defensible niches.
Buy, Sell, or Hold at $13.17?
At current levels, SOUN represents a high-risk, high-reward investment. For aggressive investors, the $13.17 entry point offers exposure to a company doubling revenue each year, expanding enterprise deals, and benefiting from secular AI adoption. The bull case targets $18.00–$20.00 within 12 months if execution continues and macro headwinds ease. The bear case sees a retreat toward $11.00–$12.00 if inflation pressures worsen and valuation compression persists. On balance, SOUN is best categorized as a Buy on dips, but only for risk-tolerant investors with a multi-year horizon.
