SoundHound AI (SOUN): Reassessing Valuation as Growth Outpaces a Recent Share Price Pullback

SoundHound AI (SOUN) has quietly slid over the past month, even as its revenue keeps growing at roughly 31% a year and net losses narrow, prompting investors to reassess what they are really paying for.

See our latest analysis for SoundHound AI.

At $10.78, SoundHound AI’s weak recent share price returns, including a double digit year to date decline, suggest momentum has cooled for now, even though the three year total shareholder return remains extraordinary and keeps the long term growth story alive.

If you like the growth angle here and want to see what else is shaping the space, now is a good time to explore other high growth tech and AI stocks.

With the stock now trading well below analyst targets despite solid double digit growth and shrinking losses, investors face a pivotal question: is SoundHound AI a mispriced growth story or is the market already discounting its future upside?

Most Popular Narrative Narrative: 36.4% Undervalued

With the most followed narrative placing fair value well above the last close at $10.78, the implied upside rests on aggressive long term expansion.

Strategic partnerships and integrations with automotive OEMs (including global and Chinese brands), restaurant tech providers, and enterprise channel partners are accelerating user adoption, market penetration, and expanding monetization opportunities, further supporting future topline and earnings growth through network effects.

Read the complete narrative.

Want to understand why rapid revenue compounding, margin expansion, and a rich future earnings multiple all converge on a much higher value? The key assumptions might surprise you.

Result: Fair Value of $16.94 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent losses, heavy spending, and lumpy enterprise deals could derail the path to profitability and force a re-rating of growth expectations.

Find out about the key risks to this SoundHound AI narrative.

Another View: Rich Multiples Signal Very Different Risk

That bullish fair value of $16.94 leans heavily on rapid growth and future margins, but today the market is already charging a steep price, with SoundHound AI trading at 30.5 times sales versus 4.8 times for the US software industry and 16.9 times for peers.

Even against a fair ratio of 5.9 times sales, the current level looks stretched, suggesting investors are paying far in advance for execution that still needs to be proven. Is this really a bargain, or more of a high wire act?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own SoundHound AI Narrative

If this perspective does not quite fit your view, or you would rather dig into the numbers yourself, you can build a complete narrative in just a few minutes, Do it your way.

A great starting point for your SoundHound AI research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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