Soundhound AI (SOUN 3.59%) exploded onto the scene in recent years with its expertise in artificial intelligence-driven voice technology. The company powers voices you may have communicated with in your car, at a restaurant, or when making an appointment. As Soundhound has grown its number of customers and expanded across industries, revenue has surged quarter after quarter.
But profit has remained elusive, and this has weighed on stock performance in recent times. Though the stock soared 600% over three years, it's dropped 35% over the past year. And today it trades for just under $11. Is Soundhound AI stock going to $0? Let's find out.
Image source: Getty Images.
Why investors bought Soundhound stock
First, let's consider why investors flocked to Soundhound in the first place. The company's successes came at the right time, when everyone was looking for AI stocks to buy in order to bet on this new game-changing technology. Many flocked to Soundhound as its method stands out and has delivered growth.
Soundhound translates speech directly into meaning, bypassing the common step of translation into text. This results in greater speed, of course, but greater accuracy too. Soundhound has protected its innovations with more than 200 granted patents and has more than 100 others pending. As mentioned, the company has delivered enormous revenue growth quarter after quarter -- in the most recent, revenue climbed 68%, and Soundhound announced a bunch of new deals and deal renewals across industries, from automotive to healthcare.
The company also continues to innovate -- for example, recently rolling out vision AI, integrating camera-powered technology with Soundhound's voice systems. The goal of this is to allow the platform to "see" the world around it, therefore strengthening its capabilities.
NASDAQ: SOUN
Key Data Points
Soundhound's big problem
But the major drag on Soundhound's stock performance has been its lack of profitability even as revenue advances.
SOUN Net Income (Quarterly) data by YCharts
Investors worry that even as Soundhound continues to deliver growth, and this requires ongoing investment, it may be struggling to generate a profit. And without a clear idea of how the company might reach this milestone, investors have avoided the stock in recent months.
Now, let's return to our question: Is Soundhound going to $0? I don't think Soundhound will make such an extreme move, as the company has been scoring contract wins and delivering growth. It hasn't been struggling to compete in the voice space, and this is an important point.
Soundhound recently predicted "near break-even profitability levels" in 2026 as the company reinvests a portion of its returns. Investors may hesitate to buy until they see whether Soundhound can deliver on that promise -- and if it stumbles, the stock may fall further. All of this means Soundhound stock may not be out of the woods just yet.
