For its size, SoundHound AI (SOUN +6.62%) gets a lot of attention. The company has a market capitalization of only $4.5 billion, but its average trading volume exceeds 21 million shares -- or more than twice the trading volume of other stocks with similar market caps.
One reason SoundHound receives attention is its position in the rapidly growing artificial intelligence (AI) space. SoundHound's AI platform enables users to engage in conversations with voice-enabled services and applications.
It also garnered significant attention in 2024, when Nvidia disclosed that it had taken a stake in the company during an earlier private venture round. And even though Nvidia sold that stake more than a year ago, SoundHound still gets investors' attention.
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Today, SoundHound stock trades at around $11 per share, and the stock price has decreased by 38% over the last year. However, it's quickly expanding its customer base to include tech companies, automakers, and restaurants, and has a solid cash position with no debt. Should it be part of your investment portfolio in 2026?
What does SoundHound AI do?
SoundHound AI has numerous applications, including automotive, restaurants, voice commerce, and a music app that identifies music, whether it's being played or hummed. SoundHound's customers can create custom AI-powered voice assistants to handle incoming calls, embed brand-specific information into products, and employ custom voice AI products. It can also be used for internal projects, such as providing employees with voice access to manuals and training.
SoundHound's AI platform is capable of listening, reasoning, and acting, with a median latency of only 350 milliseconds. And it's built to work with all kinds of large language models, including those offered by Mistral AI, OpenAI, and Anthropic. The company currently has more than 400 patents, ensuring its leadership position in voice AI.
Its core automatic speech recognition (ASR) product is Polaris, which enables greater automation through omnichannel AI-powered ordering -- meaning it can handle drive-thru kiosks, phone calls, texts, scans, or voice ordering. "Polaris, in our view, is another significant disruption that widens the gap between us and the competition in our journey to realize SoundHound's vision," CEO Keyvan Mohajer said.
Today, SoundHound states that it has contracts with 7 of the top 10 global financial institutions and has signed a new deal with an unnamed Chinese company to integrate SoundHound Chat AI into millions of AI-enabled smart devices, initially to be distributed in the Indian market.
It has other contracts with healthcare companies, insurers, energy companies, health clubs, and many restaurants, including White Castle, Chipotle Mexican Grill, and Five Guys.
"Some of the largest companies in the world are coming to us for solutions to address their AI goals," Mohajer said. "We are at the very beginning of addressing the massive market opportunity in front of us."
Why is the stock down?
With everything happening at a quick pace, you might think that SoundHound stock is a can't-miss opportunity. And yes, the stock is up a whopping 929% in the last three years, despite the comparative weakness in the last 12 months.
Part of the problem is that SoundHound is withstanding steep losses. Although revenue in the third quarter was a record for the company at $42 million (up 68% from a year ago), SoundHound posted a net loss of $109.2 million and a loss per share of $0.27.
NASDAQ: SOUN
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A lot of that has to do with data center costs and acquisitions as the company continues to scale, but it's troubling for investors to absorb those kinds of losses. But management is projecting full-year revenue to be in the range of $165 million and $180 million, and for fourth-quarter losses to be less than $10 million. "We see additional acquisition cost synergies of roughly $20 million on an annual run rate basis to be realized more fully in 2026, which will set us up well as we align our organization with the massive tailwinds behind us," Chief Financial Officer Nitesh Sharan said.
Undoubtedly, it costs a lot of money to create innovative technologies like SoundHound is rolling out. And the work it's doing is impressive. Its newest product, which was announced Jan. 5, includes an agentic AI platform that can do tasks such as check email, adjust schedules, book flights and hotels, and make restaurant reservations.
I wouldn't expect immediate improvement from SoundHound stock. But I do think this is a good opportunity to buy a compelling company that's starting the year at a discounted price. Should the company successfully reduce its losses and inch toward profitability, the stock is likely to continue its upward trend in 2026.
