Shares of SoundHound AI (SOUN -5.82%) cooled down on Thursday, ending a string of positive price moves. The stock surged 16.3% higher from the long weekend to Wednesday evening, but gave back as much as 8.1% of those gains today. At 2:50 p.m. ET, SoundHound AI's shares are down by 5.2%.
When someone else's party sends your stock soaring
This week's surge was based on a broader wave of interest in a certain type of artificial intelligence (AI) company. A splashy buyout in the so-called agentic AI subsector drove SoundHound AI's stock 17% higher on Tuesday morning. This deal involved Paris-based technology consulting giant Capgemini (CGEMY -3.56%) picking up sector rival WNS (WNS -0.12%) from Mumbai in a $3.3 billion buyout. It didn't involve SoundHound AI directly, but the acquisition reminded many investors of SoundHound AI's agentic AI chops.
The buzz is fading today since SoundHound AI didn't immediately follow up on the market buzz with a buyout bid or a new agentic AI product of its own.
Image source: Getty Images.
Today's drop isn't as dramatic as it looks
Today's price drop looks like the next natural step in a speculative price spike. SoundHound AI still trades approximately 4% above Wall Street's average price target, and the stock has nearly tripled over the last year.
As always, I'm impressed by SoundHound AI's top-notch voice recognition tools and expect the company to do well in the long run. At the same time, the stock is soaring a bit too high for my tastes, even after Thursday's minor correction.
SOUN Operating Revenue (Quarterly YoY Growth) data by YCharts. YoY = year over year.
The company will report second-quarter results in August. Keep an eye on that report, focusing on SoundHound AI's conversion of a large order backlog into actual revenues. Agentic AI functions will play a part in this long-term process, which, as shown in the chart above, is off to a good start.
