SoundHound AI Stock Tanks: What Really Crashed 40% Last Week?

SoundHound AI just got muted—hard. Shares nosedived over 40% in five brutal trading sessions, leaving investors scrambling for answers while Wall Street analysts sharpened their knives.

The AI voice recognition specialist, once hyped as the next big thing in tech, saw its valuation evaporate faster than a meme coin in a bear market. No earnings miss, no scandal—just the cold, hard reality of profit-taking meets weak hands.

Retail traders piled in during the early-week pump, only to get crushed when institutional sellers flipped the script. Volume spiked to 200% of the monthly average—classic distribution pattern.

Technical support? Obliterated. The stock sliced through its 50-day moving average like a hot knife through butter. Now it’s testing the $2.75 zone—a level not seen since the post-SPAC hangover days.

Why the meltdown? Blame it on the classic combo: over-leveraged positions, gamma exposure unwind, and that special flavor of panic only small-caps can deliver. Plus, let’s be real—when your entire thesis relies on ‘AI adjacency,’ you’re basically betting on vibes. And vibes aren’t collateral.

SoundHound’s tech is legit—voice AI for cars, restaurants, IoT—but in a market where ‘AI’ stocks trade like lottery tickets, even the promising ones get punished when momentum breaks. Funny how that works.

So, is this a buying opportunity or a warning shot? Depends if you think voice AI is the next frontier… or just another overfunded niche in search of a problem. Either way, it’s a stark reminder: in tech investing, sometimes the loudest bark comes from the most wounded dog.

Image source: Getty Images.

SoundHound AI stock sank in response to a new MIT report

On Tuesday, the Massachusetts Institute of Technology (MIT) released new research results suggesting that most businesses have yet to see real bottom-line improvements connected to their investments in generative AI. According to MIT's new report, 95% of the businesses that it incorporated as part of its study were still in the red on their AI investments. The research triggered substantial valuation pullbacks for many AI stocks, and SoundHound AI was among the companies hit with big selloffs.

Macroeconomic indicators also caused big moves for SoundHound AI

Last week, the Bureau of Labor Statistics published its Produce Price Index report for July, and the data showed levels of inflation that were far higher than economists had anticipated. With inflationary trends coming in hotter than expected in the wholesaler market, alarm bells were raised that higher levels of inflation WOULD soon arrive in the consumer sector of the economy. Quarterly updates from some of the U.S.'s biggest retailers added to the weight of those fears this week, but investors got a big relief thanks to a speech from Federal Reserve Chair Jerome Powell on Friday.

In his speech, Powell seemingly indicated that signs of slowing growth in the U.S. economy had become a bigger factor than current inflationary pressures when it comes to the Fed's approach to interest rate policy. If the Fed cut rates next month, it could help strengthen bullish momentum for SoundHound AI stock.