At times this year, artificial intelligence (AI) stocks led the market sharply higher. And at other times, these stocks were a major drag on market indexes.
SoundHound AI (SOUN 3.47%) has been no exception. While there have been ups and downs in 2026, shares are now 26% lower year to date.
If you've been looking for high-potential stocks trading at a discount, this could be your chance. With that said, there are two reasons in particular to believe SoundHound stock could soar in 2026.
NASDAQ: SOUN
Key Data Points
1. AI stocks rarely go on sale
Over the past few years, artificial intelligence stocks have been some of the best performers globally. It's not hard to see why. Most estimates believe AI spending will increase by 30% or more annually for years to come. This could be a growth opportunity that extends a decade or more.
For the most part, the biggest AI winners have been large big tech firms with the financial firepower necessary to invest heavily in the infrastructure required to push AI technologies forward. Without big spending budgets, many smaller firms have had difficulty attracting and retaining talent. Smaller firms have also faced challenges sourcing key AI components like GPUs.
For this reason, many smaller AI stocks have fallen off the radar. With a market cap of just $3.3 billion, many seasoned AI investors still haven't taken a close look at SoundHound. The latest price correction should get the company more attention.
SoundHound's business model is fairly simple. As its name suggests, the company develops and sells AI services that help with applications dealing with sound. Think automated drive-thrus, customer service lines, wearable technology, and in-vehicle entertainment systems all staffed by AI agents. In recent years, the company has attracted a growing list of notable brands to pilot and adopt its technology, including major car manufacturers, global retail chains, and fast food restaurants.
Unsurprisingly, SoundHound's revenue growth has been impressive. Sales have grown by more than 1,000% since 2022. And this year, analysts expect sales to grow by another 37% following a roughly 100% growth rate in 2025.
Image source: Getty Images.
2. SoundHound remains a prime acquisition target
SoundHound isn't without its flaws. Competition in the AI services industry is fierce, and as mentioned earlier, big tech competitors have research and development budgets that dwarf anything SoundHound can muster. But SoundHound has an advantage that would be of great value to a potential acquirer: an extensive list of existing customer relationships.
Acquiring new customers can be costly. More importantly, it takes time to develop these relationships. With AI businesses scrambling to achieve scale, acquiring a business with dozens of existing relationships with globally recognized brands could be a huge win.
In this way, SoundHound's diminutive size works in its favor, not against it. Acquiring the company outright, especially after the recent sell-off, would be a drop in the bucket for most big tech competitors.
Alongside customer relationships, a potential acquirer would also gain access to 220 patents, with another 100 patents currently pending. With these patents, SoundHound estimates its total addressable market exceeds $140 billion. With a greater ability to innovate, these patents could be more valuable to an acquirer than to SoundHound as a stand-alone business.
To be clear, I wouldn't invest in SoundHound solely as an acquisition target. Investors must be comfortable owning the company as a stand-alone entity. But it's increasingly clear what a potential acquirer would gain by purchasing the company outright.
Some experts believe we are entering a phase of AI consolidation. If that is the case, SoundHound could become a prime acquisition target.
