When looking at artificial intelligence (AI) stocks that have had rough years, SoundHound AI (SOUN +7.89%) is one of the more intriguing ones that could be setting up to rebound in 2026. The stock is down more than 50% from its 52-week high and nearly 40% on the year.
SoundHound first gained attention after Nvidia disclosed that it had taken a stake in the voice AI company during Q4 2023. The chip giant later sold out of it for big gains in Q4 2024, which caused the stock to tumble when that fact was revealed earlier this year.
However, SoundHound is already going down a much different path than when Nvidia owned it, which could set it up to rebound strongly in 2026.
From voice AI to agentic AI
SoundHound is still a very young company, but it already has a history of quickly adapting to an ever-changing tech landscape. The company actually started out as a music recognition app, but it leveraged its work in that technology to create a voice AI platform.
Its voice technology moves beyond simply transcribing what someone says or responding with a canned number of answers. Instead, it seeks to interact with people more naturally, understanding intent before someone is finished speaking, much like humans do. It's able to do this through the patented "speech-to-meaning" and "deep meaning understanding" technology that it developed.
The company gained early traction in the auto space, as carmakers began looking for better voice assistants for their automobiles. SoundHound's platform allowed car owners to more easily interact with their vehicles. With just voice commands, they could get directions or find a nearby restaurant with specific criteria. It was also able to give drivers real-time help from their auto manuals.
SoundHound also gained a foothold in the restaurant industry. Here, it was able to take orders over the phone, as well as at kiosks and through drive-thrus. It even had solutions that could help employees with tasks through their headphones if they needed assistance.
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However, SoundHound once again looked to transform itself when it acquired Amelia last year. Amelia was a provider of virtual agents in regulated industries like healthcare and financial services that had compliance considerations and industry-specific jargon. Amelia's technology was strong with regard to conversational intelligence, such as identifying context and emotions, but didn't have SoundHound's speed and accuracy with processing natural language.
SoundHound combined Amelia's technology with its own to not only enhance its voice platform, but to be the foundation of its pivot to voice-powered AI agents. Instead of just looking to provide AI voice assistants, it's looking to offer AI agents that can act as virtual employees. This is a huge leap forward, and where the market is headed. SoundHound has already started moving its largest customers to its new Amelia 7 platform, which uses AI agents to handle complex customer and employee interactions.
As the world moves beyond generative AI and toward AI agents, this could become the next big market. While many companies are working on AI agents, SoundHound is differentiating itself through its voice-first approach. This could be a big edge, because if AI agents are going to go out and perform tasks, they better fully understand what a person is saying and their intent.
SoundHound has already been growing its revenue quickly this year. Its revenue has more than doubled through the first nine months, and grew 68% last quarter. Perhaps more importantly for investors, though, is that the company is nearing earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability. It said that if it hits the high end of its revenue target, it should be EBITDA profitable in Q4.
Given that it's just at the start of its AI agent journey, SoundHound has a long runway of growth in front of it. If the company can flip to EBITDA profitability next year, continue to improve its gross margins, and still grow its revenue at a rapid pace, the stock should rebound strongly in 2026.
