SoundHound AI (SOUN +3.28%) was one of 2024's top-performing stocks, rising 836%. However, 2025 hasn't been so kind, as the stock has fallen 45%.
But investors may have just gotten some good news that could reverse SoundHound AI's fortunes in 2025. The company recently reported fourth-quarter results, and to say they knocked it out of the park is an understatement.
Is this enough of a catalyst to reverse the stock? Let's find out.
SoundHound AI posted fantastic Q4 growth numbers
SoundHound AI does exactly what its name sounds like: It allows AI users to prompt models with audio inputs. This is incredibly useful, as generative AI models normally require text input to start the process. This isn't always feasible, such as when you're in a drive-thru or driving a car. These are just a few places that generative AI can affect (automating drive-thru systems and acting as a digital assistant while driving), and SoundHound has already made headway in those markets. It also has a presence in other sectors, like healthcare, financial services, insurance, and travel.
The sky is the limit as to what can be automated with SoundHound's tools, as any time you talk to a human over the phone could be a potential target for SoundHound's software. This massive market opportunity is why many investors were so bullish on the stock in late 2024, as the company's growth is starting to take off.
NASDAQ: SOUN
Key Data Points
In Q4, SoundHound posted revenue of $34.5 million, which was up 101% year over year. This exceeded management's guidance by about $1 million. Although they gave preliminary 2025 guidance in the third quarter, they also bumped that range up. Originally, they expected between $155 million and $175 million in 2025, but now they project between $157 million and $177 million. This strong guidance indicates revenue will about double in 2025, which is why investors are excited about the stock.
One thing to note is that SoundHound isn't profitable. However, it has nearly $200 million in cash on its balance sheet with no debt and is projecting to turn an EBITDA profit by the end of the year. While this isn't true profitability, it is a key step along the way, and one that investors should know about.
SoundHoundAI's stock is much cheaper than it was just two months ago
But is this enough to turn around the stock? After all, the selling pressure has been incredibly high in 2025. SoundHound's stock was heavily sold off at the start of the year because of its premium valuation. It entered the year valued at just under 100 times sales, but now sits at a much more reasonable 49 times sales -- which is still a very expensive valuation.
SOUN PS Ratio data by YCharts.
However, if the company doubles its revenue year over year, this price could be justifiable.
Looking into the future, SoundHound has an important metric known as revenue backlog. This is the current value remaining on all the contracts it has signed. While this isn't a guarantee of revenue, it gives investors an idea of how much growth could come over the next few years.
When this revenue will be recognized is also impossible to know, so this figure should be seen as an indicator, not a guiding light. SoundHound's backlog in Q4 was $1.2 billion, up 75% year over year. This indicates that we will see some big growth even past 2025, so SoundHound's stock price may not be too outlandish at these levels.
So, if you're looking to get into SoundHound's stock, I'd say do it in small bits. The quarterly report could be a massive catalyst for a turnaround. However, it could also be just a quick breather from the sell-off, and the stock could continue its downward spiral.
Still, the business looks strong, and there are reasons to be excited about the stock. SoundHound AI should be a successful long-term investment, but there may be some short-term pain.
