SoundHound AI stock soared 10% during Friday trading, closing at $11.75 after hitting an intraday high of $12.31. The trading volume reached approximately 39.1 million shares, representing a dramatic 38% rise over the average daily volume of 28.4 million shares.
The surge in stock price came on the heels of Oppenheimer’s decision to maintain its Perform rating for the voice AI company following its recent analyst meetings and product demonstrations at CES. Analyst Brian Schwartz pointed to the emergence of new agentic capabilities and notable platform differentiation as key highlights.
Oppenheimer characterized SoundHound as a “well run business” uniquely positioned to capitalize on the monetization of voice AI across various sectors and enterprise IT systems. The firm acknowledged the company’s adept handling of strategic mergers and acquisitions.
Schwartz suggested that SoundHound might be among the fastest-growing companies in software by 2026, underscoring its impressive revenue growth momentum with a five-year CAGR (Compound Annual Growth Rate) of 62%.
Strong Revenue Growth, Lingering Profitability Issues
Despite the upward trajectory, SoundHound’s recent quarterly results revealed both promise and challenges. The company reported revenues of $42.05 million, surpassing analyst expectations of $40.48 million. This year-over-year growth of 67.6% highlights the expanding voice AI market.
However, the company also reported a loss of $0.03 per share, exceeding consensus expectations of a loss of $0.09. While the revenue figures shine, profitability remains an issue, as SoundHound carries a negative net margin of approximately 211%.
On a more positive note, the company boasts a robust current ratio of 5.15, with more cash than debt on its balance sheet. Analysts predict an impressive 98% sales growth for the current fiscal year.
Over the past twelve months, SoundHound’s revenue has surged by 120.5%. The stock currently trades above its calculated fair value at $11.06.
Market Signals Reflect Cautious Optimism
Analyst sentiment toward SoundHound is cautiously optimistic, with a consensus rating of “Moderate Buy.” The average price target is set at $16.07, indicating potential upside from current levels.
According to analyst ratings, two have designated the stock as a Strong Buy, five have assigned Buy ratings, two suggest holding, and one analyst has issued a Sell rating. Notably, Piper Sandler has recently lowered its price target from $15.00 to $11.00 while maintaining a neutral stance.
However, insider trading presents a contrasting picture. Company insiders sold roughly 492,965 shares over the past 90 days, with SVP Majid Emami selling 32,741 shares at $10.66 in late December and CFO Nitesh Sharan divesting 60,780 shares at $11.28 that same month. These sales reflected declines of 5.79% and 3.44% in their respective ownership stakes.
Institutional ownership has remained steady at 19.3% of outstanding shares. Notably, the Vanguard Group increased its holdings by 16.4% in the third quarter, now owning 43.5 million shares valued at approximately $699 million. Other institutions, including Geode Capital Management and State Street Corp, have also expanded their positions in recent months.
While Oppenheimer’s evaluation of SoundHound’s technological advancements is positive, concerns about the company’s current valuation and “risks to the durability of profitable growth” led to maintaining its Perform rating. The stock currently trades at a high price-to-book ratio of 11.64.
With a market capitalization of $4.94 billion and a beta of 2.65, SoundHound’s 50-day and 200-day moving averages sit at $12.04 and $13.48, respectively. Analysts do not expect the company to be profitable this year, with forecasts indicating an EPS of -0.38 for the ongoing year.
