SoundHound AI Stock: Time to Buy or Just Hype? (August 2025 Update)
SoundHound AI's stock is either the next big bet—or another overhyped tech play. Here's the breakdown.
The Bull Case: AI Voice Tech's Sleeping Giant?
Voice recognition is eating the world—from smart kitchens to car dashboards. SoundHound’s niche? Edge computing for low-latency responses. No cloud dependency means faster, cheaper deployments. If they lock in auto or IoT partnerships, this could moon.
The Bear Trap: Cash Burn & Competition
They’re still bleeding money—typical for AI startups banking on ‘future dominance.’ Meanwhile, OpenAI and Google shove billions into voice AI. SoundHound’s tech’s slick, but can it outrun deep-pocketed rivals? Cue skeptical investor faces.
The Bottom Line
High-risk, high-reward. Worth a punt if you believe in bootstrapped AI underdogs. Otherwise? Maybe just stick with NVDA and let the gamblers play. (And hey—if it crashes, at least you’ll have a tax write-off.)
Image source: Getty Images.
Why is SoundHound growing so rapidly?
SoundHound's namesake app helps people identify songs with just a few seconds of audio or a few hummed bars. But it generates most of its revenue from Houndify, a developer-oriented platform which enables companies to customize their own voice recognition services.
It's a popular option for businesses which don't want to share their voice data with a tech giant like or's Google. Its growing list of customers includes automakers like, quick-serve restaurants like, and tech giants like. Here's how its revenue, adjusted gross margins, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) have changed since its public debut in 2022.
|
Revenue |
$31.1 million |
$45.9 million |
$71.8 million |
|
Revenue Growth (YOY) |
47% |
85% |
187% |
|
Adjusted Gross Margin |
76.2% |
58.5% |
55.3% |
|
Adjusted EBITDA |
($35.9 million) |
($61.9 million) |
($36.5 million) |
Data source: SoundHound AI. YOY = Year-over-year.
SoundHound's revenues are soaring, but its acceleration was mainly driven by its acquisitions of the AI restaurant services provider SYNQ3, the online food ordering platform Allset, and the conversational AI company Amelia throughout 2023 and 2024. Without those acquisitions, its core business WOULD have grown at a much slower rate.
As SoundHound expanded, its growing dependence on lower-margin restaurant service revenue, rising cloud infrastructure costs, and high onboarding and customization expenses for its new customers compressed its gross margins. That pressure could worsen if the company relies on more acquisitions to drive its top line growth.
However, SoundHound believes its gross margins will stabilize and improve over the long term as economies of scale kick in and it expands its higher-margin software licensing and royalties segment, which integrates Houndify into cars and other connected devices.
But is SoundHound getting overvalued at these levels?
From 2024 to 2027, analysts expect SoundHound's revenue to grow at a compound annual growth rate of 47% as its adjusted EBITDA turns positive by the final year. But with an enterprise value of $4.14 billion, it already trades at 25 times this year's sales. The company has also more than doubled its number of shares since its public debut, and that dilution should continue for the foreseeable future.
SoundHound's declining margins, steep losses, high valuation, and persistent dilution should limit its upside potential, even as its revenue keeps rising. That might be why sold its entire stake in SoundHound earlier this year, and why its insiders sold nearly seven times as many shares as they bought over the past 12 months.
So while SoundHound might be a promising play on the expansion of the "agentic AI" market, investors shouldn't pay the wrong price for the right stock. It could be worth nibbling on at these levels, but I wouldn't accumulate a bigger position unless the company proves that it can grow its business organically and stabilize its gross margins.
