Why SoundHound AI Stock Crashed 11% Today - The Brutal Reality Check

Another day, another AI stock getting absolutely hammered. SoundHound AI just took an 11% nosedive today, and frankly, anyone paying attention saw this coming from miles away.

The Overhyped AI Bubble Bursts

When your entire valuation depends on buzzwords rather than actual revenue, eventually gravity wins. SoundHound's been riding the AI hype train straight into overvalued territory—today was just the market's way of asking for some actual numbers.

Meanwhile in actual innovation land...

While traditional stocks play musical chairs, crypto's building the future. SoundHound drops 11% on vaporware promises while Bitcoin's up 15% this month on actual adoption. But sure, keep trusting those Wall Street analysts who still think blockchain is just for buying drugs.

Time to wake up and smell the disruption. The old guard's crumbling while decentralized tech keeps printing—but what do I know? I just follow the money.

What's going on?

All kinds of market darling stocks fell on Tuesday as earnings reports from the retail sector showed signs of tariff-based inflation. That's bad news for a stock like SoundHound AI. The company is unprofitable and its stock is trading on long-term revenue growth opportunities instead. Even so, SoundHound AI shares are changing hands at 41 times trailing sales -- after Tuesday's sharp price correction.

Image source: Getty Images.

Standard operating procedure for growth investors

This is just a normal Tuesday afternoon for richly valued growth stocks and their investors. SoundHound AI is incredibly volatile with a beta rating of 2.8. In other words, the stock tends to MOVE in the same direction as the overall market, but roughly 2.8 times as far in either direction. That wobbly foundation sets the stock up for sudden moves likes today's price cut.

SoundHound AI reported strong second-quarter results earlier this month, adding support to the stock's soaring valuation. But earnings are still negative and it will take years to convert its billion-dollar contract backlog into actual revenue.

At this point, SoundHound AI's stock has gained 168% in 52 weeks but also trades 47% below December's frenzied peak. I believe in the company and its robust AI technology, but the stock still looks overvalued.