SoundHound AI (SOUN 4.11%) continues to deliver exceptional revenue growth, although its stock price has been more than cut in half since October. Let's take a close look at the artificial intelligence (AI) voice-focused company to see if now is a good time to buy the stock.
SoundHound revenue continues to surge
SoundHound once again saw its revenue surge in the fourth quarter. More importantly, management also provided an upbeat full-year outlook for fiscal 2026, expecting revenue of between $225 million and $260 million. That would equate to growth of between 33% and 54%. It expects revenue to ramp up through the year, as it is seeing renewals come with agentic solutions, which come with a price increase and sometimes large volume commitments.
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For Q4, SoundHound's revenue jumped 59% year over year to $55.1 million. Its 2025 revenue, meanwhile, nearly doubled. That came in above the $54 million analyst consensus.
The company's adjusted net earnings per share in Q4 improved from a loss of $0.05 last year to a loss of $0.02 this year, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was a loss of $7.4 million, compared to a loss of $16.8 million a year ago. It had an operating cash outflow of $27.2 million in the quarter and $98.2 million for the year. It ended the year with $248 million in cash on its balance sheet and no debt.
Its gross margins continue to see improvement. Per generally accepted accounting principles (GAAP), gross margins soared 800 basis points from 39.9% to 47.9% year over year and 530 basis points from 42.6% in Q3. Adjusted gross margin expanded 840 basis points year over year to 60.5% and was up from 59.2% in Q2.
Looking ahead, the company said it believes it can be a 70%-plus gross margin business with 30% EBIT margins. While it did not give profitability guidance, it said it was entering a new break-even phase after years of heavy investment.
NASDAQ: SOUN
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Is SoundHound's stock a buy?
Trading at a price-to-sales (P/S) multiple of about 16 times the 2026 revenue consensus analyst estimate, SoundHound's stock is not cheap. Meanwhile, it hasn't yet turned a profit, nor is it generating free cash flow. That makes it a speculative stock.
However, the company is growing its revenue quickly, and it does have one of the more intriguing opportunities in agentic AI. If you are going to have AI agents that interact with people in areas like customer service, companies are going to want their AI agents to communicate more naturally and understand intent so as not to frustrate customers. That's what SoundHound's AI platform is meant to do, so it has a huge opportunity in this area. Nonetheless, I'd only consider a small position given its valuation and would prefer it on a pullback.
