SoundHound AI Stock: Buy Signal or Hype Trap in 2025?

Voice AI's sleeping giant awakens—but can it deliver real returns?

THE BULL CASE

SoundHound's conversational intelligence platform cuts through the noise in crowded markets. Its proprietary technology bypasses legacy systems, landing contracts with automotive giants and restaurant chains hungry for AI-driven customer solutions.

THE BEAR TRAP

Voice recognition faces brutal competition from tech titans spending billions. The stock's volatility mirrors crypto's wilder days—without the decentralized promise. Another 'AI revolution' stock trading on buzzwords rather than balanced sheets.

Smart money watches adoption metrics, not press releases. Because nothing says 'solid investment' like a company whose technology recognizes 'play Despacito' better than it recognizes profitable unit economics.

Image source: Getty Images.

Can you guess SoundHound AI's largest shareholder? I sure couldn't!

I'm looking at these specific time spans for a reason, by the way. Thestock market index rebalances its holdings on a quarterly basis, and the(VTI 0.62%) updates its positions less frequently. SoundHound AI has posted large gains since the June reshuffling of Russell 2000 and the latest available snapshot of specific VTI holdings. As a result, the stock has become a top holding in the portfolios I just mentioned.

SoundHound AI makes up 0.22% of the Russell 2000 index today, putting it in the top 2.5% of the small-cap index's weighting.

In the Total Stock Market fund, Vanguard holds 11.7 million SoundHound AI shares. That position is worth $194 million right now, making it a minuscule 0.035% of this huge fund. It also makes Vanguard the top owner of the company's shares. Together with 10 of its smaller funds, Vanguard owns 8.9% of this stock.

I didn't expect that when I started this review. An ultrasafe index fund giant is the top shareholder of this volatile artificial intelligence (AI) stock. Market-cap weighted stock indexes can play funny little tricks sometimes.

But the burning question remains: Is SoundHound AI a good investment in September or has the stock jumped too high again?

SoundHound AI's recent wins

I do see some material improvements, supporting the bullish argument:

• The company obliterated Wall Street's revenue estimates in August's second-quarter report and boosted its full-year guidance for that metric. Second-quarter sales more than tripled year over year.

• Voice-controlled computer systems and conversational AI interactions are getting popular, and SoundHound AI is a proven leader in this field. Recent client contracts include restaurant chains Red Lobster and Dine Brands' IHOP, Chinese online giant Tencent, and three unnamed car brands in North America.

• In other news, SoundHound AI released a "visual understanding engine" called Vision AI, expanding the company's audio-based information and interpretation services to a different type of media. And if you're the kind of person who talks with your hands, that's OK -- the company applies the same back-end AI to visual and verbal data, looking for a more accurate takeaway from complex human-to-machine interactions.

I'm still not smashing SoundHound AI's "buy" button

So SoundHound AI is going places, and the business wins are starting to trigger significant revenue streams. That's new, and a game-changing step forward.

The stock still isn't cheap, trading at 51 times trailing sales with deeply negative profit margins. Furthermore, the company is still in a show-me stage of development. Maybe I'll kick myself later for not taking a more bullish stance with this stock right now, following the market-guided buys of Vanguard and others, but I'm pretty satisfied with the shares already in my portfolio.

Call it a "strong hold," I suppose. SoundHound AI is a comfortable long-term growth bet at this point, but not my favorite tech stock to buy in September 2025. In my eyes, the risk-and-reward balance isn't quite there yet.