SoundHound AI Stock: The Next Big Bet or Just Hype?

SoundHound AI's stock is making waves—but is it the real deal or just another overhyped tech play?

The AI Voice Race Heats Up

As voice recognition tech booms, SoundHound's niche in edge-computing AI gives it a fighting chance against giants like Google and Amazon. No cloud dependency? That’s their pitch—and investors are biting.

Wall Street’s Love-Hate Relationship

Analysts can’t decide if SoundHound’s a moonshot or a mirage. Revenue’s climbing, but profitability? Still MIA. Typical tech-stock Schrödinger’s cat—both thriving and dying until the earnings report drops.

The Bottom Line

High risk, high reward. Just remember: in a market where ‘AI’ adds 50% to any valuation, sometimes the loudest bark has the weakest bite.

Image source: Getty Images.

SoundHound posts 217% revenue growth

On Aug. 7, SoundHound released its second-quarter results. The company reported an all-time high for revenue, which totaled $42.7 million -- that's more than triple the $13.5 million that the business reported in the same period last year. The tech company has been expanding its business in many industries as its vast customer base has helped it expand across multiple sectors.

The company also has released Amelia 7, which is its agentic AI platform that it says can be used for complex queries and perform them "as part of natural, humanlike interactions." SoundHound says that it now has 15 large enterprise customers that are migrating to this new platform.

The company is still no closer to profitability

While SoundHound reported strong growth in its most recent quarter, its financial performance was far from flawless. Its net loss doubled, from $37 million a year ago to just under $75 million. What also didn't look great was a significant decline in gross margin -- from 63% to 39%. The company says that this was mainly the result of its acquisition of AI company Amelia back in 2024. And it's that acquisition that has been a key reason why SoundHound's customer base has become more diverse, and why its revenue is up so much; the prior-year results didn't include contributions from Amelia.

Another issue to consider is that SoundHound has been burning through more cash. Over the past six months, it used up $44 million during its day-to-day operating activities, compared with $40 million during the same period last year.

Unfortunately, while SoundHound has experienced significant growth, it comes with an asterisk. Not only were the results boosted by an acquisition, but they didn't MOVE the needle in terms of improving cash flow and overall profitability. Without that, this remains a highly risky business to invest in.

SoundHound AI still has a lot to prove

Mergers and acquisitions can be a great way for companies to manufacture growth. By simply adding another company into the mix, you're adding sales without needing to grow organically. SoundHound highlighted its overall growth rate last quarter, but not its organic growth, which may tell a much different story.

While the headline of 217% growth sounds impressive, I'm not convinced that SoundHound is really on the right path. If its margins are deteriorating and losses are getting bigger, it may simply be incentivizing customers with lower prices and promotions in order to grow sales.

Shares of SoundHound jumped on the quarterly results, but the stock is still down around 18% this year. And as the excitement from the revenue growth cools and investors take a closer look at the numbers and see the risks that still linger with the stock, I wouldn't be surprised to see it give back some of its recent gains.

This is still a risky stock to own, and until SoundHound shows that it has a path to profitability, you may be better off steering clear of it.