SoundHound’s AI voice technology has garnered significant interest from customers and investors.
SoundHound AI (SOUN 3.87%) came into existence in 2005 when its current industry, artificial intelligence (AI), was in its infancy. Admittedly, it took time for the company to find its stride, but its voice-commanded AI products have won over clients and investors alike.
Consequently, its stock has shot significantly higher over the last three years. If one had invested $10,000 in the company before the current run-up in the stock price, they are likely happy with their returns today.
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SoundHound AI’s growth over the last three years
A $10,000 investment in SoundHound AI three years ago would be worth nearly $44,200 today.
The rising stock price is easy to understand when examining the financials. In the first half of 2025, revenue increased by nearly $72 million, a 186% year-over-year increase.
Unfortunately, other financial metrics point to some red flags. The company’s operating expenses far outpace its revenue. For this year, SoundHound cashed in on a $145 million change in the fair value of contingent acquisition liabilities.
This resulted in $55 million in net income during the first half of the year. Without that one-time benefit, SoundHound would have had a significant net loss.
Another potential worry is its size. If multitrillion-dollar enterprises such as Apple or Google’s parent company, Alphabet, decide to more actively compete, it is unclear how SoundHound might find the resources to take on those tech giants, considering its $5.3 billion market cap.
Worse, the market cap might overestimate its value. Amid the run-up in the stock price, SoundHound AI sells at a price-to-sales (P/S) ratio of 38, well above the S&P 500 index average of 3.3. At that valuation, SoundHound’s stock price could crater if investors start to doubt its business model.
Ultimately, SoundHound AI and its investors have benefited from a massive share-price gain over the last three years. However, with all its current challenges, investors should not expect a similar rise over the next three years, if it makes gains at all.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool has a disclosure policy.
