Whether or not to buy the stock of SoundHound AI (SOUN +2.26%) is a question worth pondering in light of its recent performance. Although shares of the voice-recognition software company have risen by more than 250% over the past year, they have lost over 10% of their value over the past week, primarily due to reports that top executives had sold shares.
Still, insiders sell shares for a variety of reasons, many of which do not point to company troubles. Knowing that, are the sales a sign of challenges to come, or is SoundHound AI stock a buy?
Image source: Getty Images.
SoundHound AI stock activity
Even though executives sell shares for a variety of reasons, they may appear worrying. Company insiders have sold more than 14 million shares since Sept. 22. Many of these are planned sales are tied to 10b5-1 trading plans. Nonetheless, the reasoning behind other sales is not clear, but could have to do with insiders cashing out after a six-month bull run in SoundHound's stock price.
Those stock gains came as SoundHound has benefited from its advancements in voice-driven AI. It built an early following with automobile manufacturers, and now it attracts attention from a variety of company types, including restaurants and media companies. SoundHound has stood out over big-tech competitors by developing building a competitive moat around a proprietary technology stack protected by a substantial patent portfolio.
However, a closer look at its competitive situation may back up a possible reason why insiders have sold. Despite SoundHound's position in the market, its approximate $7.5 billion market cap is a tiny fraction of the size of the mega-tech competitors that could enter this market.
Since those company's cash holdings exceed SoundHound's market cap, mega-cap tech companies could potentially become a competitive threat at any time, and it is unclear how SoundHound might respond to such a move.
SoundHound AI 's financials
The financial results illustrate such competitive concerns well. In the first half of 2025, its $72 million in revenue increased by 186% from year-ago levels.
However, its spending on operating expenses far exceeded its revenue. It turned an operating profit only because of a $145 million change in fair value on contingent acquisition liabilities. That also helped SoundHound earn a $55 million profit in the first two quarters of 2025 after losing nearly $71 million in the same year-ago period.
Knowing that, it is not clear whether SoundHound will end the year with a profit. The company forecasts 2025 revenue between $160 million and $178 million. That would approximately double revenue from 2024 levels if the prediction holds. Still, considering that operating expenses were $166 million in six months if not including the one-time charge, it would still have to cut expenses or benefit from another one-time charge to end the year in the black.
NASDAQ: SOUN
Key Data Points
Also, past losses leave the company without a P/E ratio. Still, when also considering that SoundHound stock sells at a price-to-sales (P/S) ratio of 54, it is not clear what can take the stock higher in the near term. Such conditions may explain why so many insiders cashed in some of their shares.
Is SoundHound AI stock a buy?
Given current conditions, SoundHound AI stock is not an obvious buy. Indeed, the company's proprietary technology is impressive and has allowed it to compete with the tech industry's top companies.
Nonetheless, insiders have recently sold more shares than investors had expected. Additionally, SoundHound's competitors hold the resources they would need to compete. Given that SoundHound continues to lose money operationally, it is unclear if or how SoundHound could respond to such a threat.
Amid such conditions, it is possible that insiders sold shares because of an elevated stock price, and that factor alone is likely to deter investors from adding SoundHound AI shares at this time.
