What’s next for SoundHound stock after Nvidia’s exit
As Wall Street’s obsession with AI stocks is growing by the day, tech giants are racing to cash in.
SoundHound AI, Inc. (SOUN), a voice-based AI company founded in 2005, largely flew under the radar until Nvidia (NVDA) disclosed a $3.7 million stake on Feb. 14, 2024.
The news sent SOUN stock soaring, turning an overlooked player into a Wall Street sensation. The stock jumped roughly 570% in response. But the rally didn’t last.
Nvidia’s exit last week wiped out much of those gains, sending SOUN shares plunging over 30% intraday on Feb. 14—the same day Nvidia’s sale became public. Since the start of the year, SOUN has dropped more than 44%.
CNBC’s Jim Cramer labeled SoundHound a meme stock last October.
“Here’s the problem with SoundHound: It’s just a chronic money loser,” Cramer said on Mad Money. “This is a meme stock, and they kinda get it going. I’m never gonna get in the way of a meme stock because you never know how high they can go.”
Investors may have brushed it off then, but recent events tell a different story.
A business beyond Nvidia?
SoundHound’s rise wasn’t entirely about Nvidia’s backing. The voice-based AI market is projected to grow at a 30% compound annual growth rate (CAGR), hitting $54.54 billion by 2033, according to Straits Research.
“AI customer service will become as necessary to all businesses as Wi-Fi and electricity,” CEO Keyvan Mohajer said on the company’s Q3 earnings call.
SoundHound has been expanding its global footprint, serving clients like Aeromexico, BNP Paribas, and Resorts World Las Vegas. The company is also pushing into the EV space, securing deals with four automakers—two of which have already deployed its software.
“We have a winning position in all pillars of our business,” Mohajer said.
Meme stock or hidden gem?
Despite bullish talk from its leadership, SoundHound’s financials tell a different story.
Revenue rose 89% year-over-year in Q3 2024, but the company remains unprofitable. Loss from operations hit $33.78 million—more than doubling from the $14.53 million loss a year earlier.
Debt is also a concern, accounting for 15% of annual costs. Even CFO Nitesh Sharan admitted, “there are economic savings to achieve.” So, is SoundHoud a meme stock or hidden gem? Analysts are split.
Cramer sees SoundHound as a hype-driven play, while Wedbush’s Daniel Ives believes it could be a long-term AI winner. H.C. Wainwright analyst Scott Buck recently issued a Buy rating with a $26 price target—implying over 137% upside.
Still, SoundHound faces stiff competition. OpenAI continues to refine its voice-based AI, and the Magnificent Seven tech giants collectively spent $293 billion on R&D last year—a 50% jump from 2021.
Meanwhile, overseas rivals are emerging. DeepSeek, a Chinese AI startup aiming to rival ChatGPT, has raised fresh doubts about the long-term dominance of U.S. AI firms.
SoundHound has potential, but Nvidia’s exit serves as a stark reminder: In AI, hype only lasts so long.