SoundHound AI's (SOUN +4.59%) 2025 is turning out to be quite different from 2024, when the stock price spiked by a stunning 836%. The conversational artificial intelligence (AI) provider's stock is down by 9% so far this year. That stock performance seems surprising considering SoundHound as a company continues to grow at a breathtaking pace.
Given this contradiction, savvy investors may be wondering if it makes sense to buy this AI stock. After all, SoundHound AI seems well on its way to making the most of the fast-growing demand for voice AI solutions through a combination of solid product development moves and acquisitions to widen its moat.
Let's check if investors should be taking advantage of the stock price pullback in SoundHound and add this stock to their portfolios.
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SoundHound AI's incredible growth is just getting started
As mentioned, SoundHound AI's business is growing at an incredible pace. Its revenue in the first half of 2025 nearly tripled on a year-over-year basis to $72 million. Management's guidance of $169 million in revenue for the full year suggests that stronger growth is in the cards for the company in the second half.
It is easy to see why SoundHound is confident of doubling its revenue this year. The demand for voice and conversational AI solutions such as AI agents, smart answering solutions, customer service assistants, and in-car voice assistants has been increasing at a nice pace. According to one estimate, the conversational AI market is likely to experience 8x growth between 2023 and 2030 on the back of its growing adoption in multiple industries ranging from retail to e-commerce to healthcare to education.
SoundHound AI is pulling the right strings to ensure that it can make the most of this fast-growing opportunity. The company made a smart move last year when it acquired enterprise AI software provider Amelia to boost its customer base into new verticals such as insurance, finance, healthcare, and retail.
SoundHound further strengthened its portfolio recently by acquiring Interactions, a company that "provides businesses with AI-powered voice assistants to enhance customer engagement while improving productivity." The company points out that this acquisition will further increase its cross-selling and upselling opportunities.
NASDAQ: SOUN
Key Data Points
Even better, SoundHound now has 400 patents following its Interactions acquisitions. This should allow the company to develop more conversational AI products that should help it attract more customers and also get additional business from existing customers. Importantly, SoundHound's acquisitions and new products, such as its agentic AI platform, should enable it to corner a bigger share of the fast-growing conversational AI market.
Moreover, SoundHound maintains a solid balance sheet with no debt and $270 million in cash. This should allow it to push the envelope further, as far as developing new products or acquiring more companies is concerned. Also, the company can spend aggressively on marketing and sales to boost customer acquisition.
In all, there is a good chance that SoundHound's growth could turn out to be much better than Wall Street is expecting in the next couple of years.
Data by YCharts.
Is the stock attractive enough to buy now?
SoundHound's slide in 2025, along with its rapidly improving growth, made the stock relatively cheaper than it was at the end of 2024. Its price-to-sales ratio is down by almost half to just over 48 from 90 at the end of last year. That's quite expensive when compared to the U.S. tech sector's average sales multiple of 8.8. But then, SoundHound is growing at a much faster pace than the broader market.
Yahoo! Finance expects the company's growth to continue outpacing the broader market going forward. Additionally, its huge backlog of $1.2 billion suggests that SoundHound has the potential to easily outperform consensus expectations and maintain the outstanding growth levels that it has been clocking this year.
So, if you're looking for a growth stock that has the ability to justify its valuation and seems built for impressive growth in the long run, buying SoundHound AI following its pullback this year could turn out to be a smart move.
