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U.S. technology sector participant SoundHound AI (NASDAQ:SOUN) has been upgraded to a 'Hold' rating by an analyst, a shift from a previous 'Sell' recommendation. This adjustment reflects the significant uncertainty surrounding the voice artificial intelligence company, which analysts categorize as a "battleground stock" due to its high volatility and polarized investor sentiment. The Event in Detail The upgrade to 'Hold' was issued on September 16, 2025, after a period where the stock experienced substantial fluctuations. Earlier 'Sell' calls yielded mixed results; one instance saw the stock decline by 26.59% from $19.74 to $14.49 between January 3 and September 11, 2025, while the S&P 500 rose approximately 12% in the same timeframe. Conversely, a subsequent 'Sell' recommendation on April 28, 2025, preceded a roughly 49% rise in SOUN shares by September 11, compared to the S&P 500's approximately 19% gain. This demonstrates the stock's extreme volatility, with 92 moves greater than 5% over the last year. SoundHound AI stock has traded between $4.32 and nearly $25 over the past 52 weeks, and year-to-date, it is down 34%, though up 168% over the last 52 weeks. Financially, SoundHound AI reported Q2 2025 revenue of $42.68 million, a 216.3% increase year-over-year, surpassing analyst estimates of $32.88 million. However, profitability remains a challenge. Q2 2025 earnings per share (EPS) were ($0.19), missing the consensus estimate of ($0.06). Net losses widened to 19 cents per share, compared to an 11-cent loss in the prior year. The company exhibits a negative net margin of 171.81%, a negative return on equity of 73.13%, and an EBITDA margin of -162.4%. Total profit margin stands at -171.28%, indicating expenditures significantly outweighing revenue. Operating and pretax profit margins are also negative. In Q2 2025, the company reported an adjusted EBITDA loss of $14.3 million, marking a 326 basis point decline from the same period in the previous year. A notable characteristic of SOUN is its high short interest, with 29.94% of its shares outstanding being shorted as of September 16, 2025. This percentage is considered very high and reflects significant bearish sentiment. As of August 31, 2025, short interest stood at 120.03 million shares, representing 32.94% of its float, a 2.58% increase from the previous month. The short interest ratio, or days to cover, was 2.4, indicating it would take 2.4 days of average trading volume to cover all short positions. Analysis of Market Reaction The analyst's decision to upgrade SoundHound AI to 'Hold' stems from the profound uncertainty surrounding both the bullish and bearish investment theses. Despite robust revenue growth, the company's path to sustained profitability and positive free cash flow remains unclear. The current high Price-to-Sales (P/S) ratio of 43.62, significantly above its three-year median, suggests that the market has priced in substantial future growth. This valuation leaves little room for error if growth expectations are not met or if the company fails to translate revenue into profit. The continued negative profitability metrics, despite strong top-line expansion, are a key factor driving this cautious stance. The market appears to be increasingly immune to strong revenue growth if it does not lead to profits or free cash flow. Broader Context & Implications SoundHound AI's financial performance lags behind more established technology peers such as Microsoft and Alphabet in terms of profitability and free cash flow. The company's strong short-term liquidity, with a current ratio of 4.8 (also reported as 3.77), provides some operational flexibility. However, its reliance on equity financing, which generated $210 million in financing inflows contributing to a net positive cash flow of almost $90 million, raises concerns about potential shareholder dilution. Historically, SoundHound has funded its growth by issuing new shares, and an at-the-market (ATM) offering is in place to raise capital as needed. Strategically, SoundHound AI is actively expanding its footprint in the voice AI and Agentic AI space. The company's voice AI platform now processes over 1 billion queries per month and is gaining traction in the restaurant sector, with deployments at over 14,000 locations, including major brands like Applebee's, Chipotle, and Red Lobster. The automotive sector is another key growth pillar, with major partnerships and a recent global win in China. Acquisitions such as Amelia (August 2024) and Interactions (September 2025) aim to bolster its AI agent capabilities for customer service. The integration of its new AI model, Polaris, incorporating vision technology, further enhances its product suite. Despite these strategic moves, the company, in operation since 2005, has yet to demonstrate sustainable business practices, fueling the substantial bearish sentiment and high short interest. An ongoing investigation by Bragar Eagel & Squire, P.C., into SoundHound's financial reporting practices, along with notable insider selling by key executives, could further impact investor confidence. Expert Commentary CFO Nitesh Sharan expressed optimism regarding the company's financial trajectory during the second-quarter 2025 earnings call. Sharan stated: > "We are moving towards profitability and we see that in the near-term horizon. We are being prudent on costs and see meaningful opportunity in cloud integrations and continued workforce optimization, particularly because of the opportunities Generative AI is providing us operationally. All that said, we believe we can achieve adjusted EBITDA profitability as we exit 2025." This outlook provides a counterpoint to the prevailing bearishness. Analyst sentiment is mixed but leans positive, with six buy ratings and two hold ratings, and no sell recommendations. The average target price is $15.44, suggesting a potential upside of 9.88%, with a range of $12.00 to $18.00. DA Davidson maintained a "Strong Buy" rating and increased its price target from $15 to $17 on September 10, while Wedbush reiterated a "Buy" rating on September 11. However, Wall Street Zen downgraded the stock to a "sell" rating on August 9, and Piper Sandler reaffirmed a "neutral" rating with a $12.00 price objective, underscoring the divergence in expert opinions. Looking Ahead The primary factor for SoundHound AI in the coming quarters will be its ability to achieve its stated goal of adjusted EBITDA profitability by the end of 2025. Failure to meet this critical financial target could lead to a significant sell-off, particularly given the high short interest. The market will closely scrutinize whether the company's strong revenue growth can finally translate into improved profitability and positive free cash flow. Management's revised full-year revenue guidance for 2025 ($160–$178 million), which is lower than implied by the strong Q2 revenue beat, suggests either a conservative outlook or potential seasonality in its business, and will require careful monitoring. The company's reliance on "lumpy deals" from quarter to quarter also presents a risk of missing future quarterly revenue estimates. While the high short interest reflects substantial bearishness, some investors believe it could also set the stage for a "short squeeze" if positive results or news emerge unexpectedly. Risk-averse investors are advised to exercise caution given the stock's speculative nature and high volatility.
Last week saw a tech rally, weak U.S. jobs data, and strengthened bets on a September Fed rate cut, leading to significant gains in leveraged ETFs tracking gold miners, SoundHound AI, Alphabet, Broadcom, and biotech. U.S. equities experienced significant upward movement last week, particularly within the technology sector and growth-oriented assets, as markets reacted to softer U.S. jobs data and increasingly solidified expectations for a Federal Reserve interest rate cut in September. This shift in sentiment propelled several leveraged exchange-traded funds (ETFs) to notable gains, reflecting investor optimism for sectors that typically benefit from lower interest rates. The Event in Detail The catalyst for much of last week's market activity was the August jobs report, which revealed the U.S. economy added a mere 22,000 jobs, falling significantly short of the 75,000 jobs analysts had forecast. This continued a trend of subdued job growth, with an average of less than 30,000 jobs added per month over the last four months, a pace considerably below what is considered a healthy labor market. This softer employment data significantly strengthened expectations for monetary policy easing, with the CME FedWatch Tool indicating a 93% probability of a 25-basis point rate cut by the Federal Reserve in September. Individual corporate developments also played a crucial role in driving sector-specific gains: Alphabet (GOOGL) shares advanced approximately 11.6% following a U.S. court's decision in an antitrust case. The ruling, described by analysts as "benign," allowed Alphabet to maintain its lucrative search deal with Apple, removing a significant overhang on the stock despite a separate $3.45 billion fine from the European Union. BofA Securities subsequently raised its price target on Alphabet, citing the favorable ruling. Broadcom (AVGO) experienced a surge of over 9% after announcing a substantial $10 billion order from a new, undisclosed customer for its custom artificial intelligence (AI) chips. Speculation widely identifies OpenAI as this new client. The company also reported robust fiscal third-quarter results, exceeding revenue and earnings estimates, with CEO Hock Tan projecting accelerated AI revenue growth. Broadcom's AI revenue increased 63% in Q3 to $5.2 billion, with forecasts to reach $6.2 billion in the current quarter. SoundHound AI Inc. (SOUN) reported record second-quarter 2025 revenues of $42.7 million, a more than 200% year-over-year increase, significantly surpassing analyst expectations. The conversational AI company also raised its full-year revenue outlook, driven by broad-based growth across its enterprise, restaurant, and automotive segments, with its Voice Commerce strategy gaining traction. Amidst these developments, several leveraged ETFs posted significant returns. The MicroSectors Gold Miners 3X Leveraged ETN (GDXU) led the advance with a 26.5% gain, benefiting from steady gold prices and safe-haven demand. Other notable performers included Defiance Daily Target 2X Long SOUN ETF (SOUX) up 25.1%, Direxion Daily GOOGL Bull 2X Shares (GGLL) up 23.6%, Leverage Shares 2X Long AVGO Daily ETF (AVGG) up 19.1%, and Direxion Daily S&P Biotech Bull 3x Shares (LABU) up 17.7%. These gains occurred even as broader indices saw more modest movements, with the S&P 500 rising approximately 0.3%, the Dow Jones declining about 0.3%, and the Nasdaq 100 gaining 1%. Analysis of Market Reaction The market's robust reaction can be largely attributed to the interplay between the weaker-than-expected August jobs report and its implications for Federal Reserve monetary policy. The ongoing softness in the labor market data, including downward revisions to prior months' figures, has reinforced the belief that inflationary pressures are easing, providing the Fed with increased flexibility to reduce interest rates. Lower interest rates typically create a more favorable environment for growth stocks, particularly within the Technology Sector and biotech sectors, as they reduce borrowing costs for businesses and make future earnings streams more attractive when discounted at a lower rate. This rotation of investment capital from bonds into stocks is a classic response to a loosening monetary policy outlook. The strong performance of key technology companies like Alphabet and Broadcom further underscored investor confidence in their growth trajectories and resilience against regulatory scrutiny. Alphabet's favorable antitrust outcome, which preserved its core search partnership with Apple, removed a significant element of uncertainty. Similarly, Broadcom's announcement of a major new AI chip customer cemented its position as a critical player in the expanding artificial intelligence infrastructure market, alongside NVIDIA. Broader Context & Implications The recent employment figures mark the fourth consecutive month of subdued job growth, signaling a potential cooling of the U.S. labor market. This trend aligns with the Federal Reserve's dual mandate of maintaining both low unemployment and stable inflation, providing more latitude for policy adjustments. While inflation remains a concern, recent data suggests price increases are moderating, further supporting the case for a rate cut to stimulate economic growth. The significant gains observed in leveraged ETFs highlight the speculative interest and amplified returns possible in specific sectors under these conditions. For instance, the Technology Sector, represented by companies like Alphabet, Broadcom, and SoundHound AI, continues to demonstrate strong underlying business fundamentals and innovation, even amidst broader economic shifts. The Gold Miners Sector also benefited, reflecting increased safe-haven demand for gold in an uncertain economic environment. > "The antitrust trial started in September 2023. Somehow even Google and Apple's $20 billion exclusive deal in Search will survive. It's unfathomable. The status quo remains. Analysts called the decision "benign" and said it removed a "significant overhang" on the stock." Expert analysis from BofA Securities indicated that Alphabet's favorable court decision "removed a significant overhang" on the stock, allowing the tech giant to continue its dominance in the generative AI ecosystem. The substantial new order for Broadcom, potentially from OpenAI, underscores the accelerating demand for custom AI chips and positions the company prominently in the evolving AI landscape. Looking Ahead The upcoming Federal Open Market Committee (FOMC**) meeting on September 16-17, 2025, will be a critical determinant for market direction. With current probabilities heavily skewed towards a 25-basis point rate cut, any deviation from this expectation could introduce volatility. Investors will closely monitor the Fed's statement for indications regarding future rate trajectory and its assessment of economic conditions. Continued labor market data, inflation reports, and corporate earnings announcements, particularly from the technology sector, will also be key factors influencing market sentiment and performance in the coming weeks. The resilience and growth drivers demonstrated by major tech companies like Alphabet and Broadcom suggest their continued importance in overall market performance, while the high volatility in leveraged ETFs indicates ongoing opportunities and risks for speculative investors.
The P/E ratio of SoundHound AI Inc is N/A
Dr. Keyvan Mohajer is the President of SoundHound AI Inc, joining the firm since 2022.
The current price of SOUN is 14.44, it has decreased 1.8% in the last trading day.
SoundHound AI Inc belongs to Technology industry and the sector is Information Technology
SoundHound AI Inc's current market cap is $5.8
According to wall street analysts, 10 analysts have made analyst ratings for SoundHound AI Inc, including 4 strong buy, 7 buy, 3 hold, 0 sell, and 4 strong sell
Looks like SOUN is catching a bid today, anon. The move is fueled by a combo of a major strategic acquisition and a steady stream of love from Wall Street analysts who are getting increasingly bullish on its AI-play. While the daily chart looks healthy, the short-term is a bit choppy, so don't ape in blindly.
Here’s the breakdown of what’s driving the price action for SoundHound AI:
Fundamental Catalyst: The Interactions Acquisition The biggest driver is the recent news from September 9th that SoundHound acquired Interactions, a key player in AI customer service, for about $60 million[^136692218^]. This isn't just fluff; it's a strategic move to beef up its enterprise offerings and accelerate its path to profitability[^136692218^][^136691117^]. By integrating Interactions, SOUN strengthens its "Agentic AI" and expands its client base into new sectors, which the market is pricing in as a significant long-term positive[^136729401^].
Social Proof: Wall Street is Bullish Analysts are clearly optimistic. Oppenheimer recently initiated coverage with a "Perform" rating, calling SOUN a potential "durable growth compounder" thanks to its strong conversational AI tech[^136741875^]. This adds to an already strong consensus:
The Technical Picture: Bullish Trend with Consolidation The charts tell a story of a longer-term uptrend meeting some short-term indecision.
The narrative is strong here, but the price is fighting near-term resistance. Watch for a decisive break above $15.21 (today's high) for a potential continuation, or see if it holds the $13.90 support. Don't get caught buying the top of a chop-fest, fren.