SoundHound AI (SOUN 5.77%) stock lost ground Wednesday morning -- trading 8% lower as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence. The audio-technologies specialist's shares had been down by as much as 14% earlier in the session.
Before the market opened Wednesday, a Northland analyst published a note that took a more cautious position on the stock. Northland's Michael Latimore lowered the firm's rating on the stock from outperform to market perform, and investors are pumping the brakes on an incredible run. Even on the heels of Wednesday's pullback, the SoundHound's stock remains up by roughly 240% over the last month.
SoundHound AI stock's incredible run raises questions
While Northland's analyst highlighted SoundHound's strengths and opportunities this year, the stock's steep valuation surge caused the firm to take a more cautious stance toward its share price. The audio tech stock has surged in conjunction with emerging artificial intelligence (AI) opportunities, the recent disclosure that Nvidia (NVDA 6.18%) owns a stake in the company, and other positive catalysts. In his note, Latimore said that investors should keep an eye on the rollout and adoption of the company's technologies at restaurants and drive-thrus this year.
What comes next for SoundHound AI?
For better or worse, SoundHound's position as an AI play sets the stage for the stock to see continued volatility, particularly after its recent gains. As the Northland note asserts, investors should keep the company's valuation in mind and weigh their personal risk tolerance before going all in on the stock.
Notably, SoundHound AI stock leaped higher earlier this month after Nvidia disclosed in its first-ever 13F filing that it owned roughly $3.7 million worth of the audio-tech company's stock. For a company of Nvidia's size and resources, however, that's a relatively small position -- and the graphics processing unit (GPU) leader actually made the investment back in 2017.
Of course, this recent valuation surge for SoundHound AI stock doesn't necessarily mean that it won't continue to make big gains over the long term. In particular, rollout expansions for the company's personal-assistant platform (which integrates OpenAI's ChatGPT software) point to promising opportunities in voice-based interfaces for artificial intelligence systems.
Investors won't have to wait long to get the latest news on the company's business performance and outlook. SoundHound AI is scheduled to report fourth-quarter results and host a conference call after the market closes Thursday.
