SoundHound AI (SOUN) shares fell about 3% in early trading on Tuesday. The stock has drawn strong investor interest amid rapid growth in voice AI and a series of high-profile partnerships. However, looking ahead to 2026, several risks are becoming harder to ignore. From ongoing profitability concerns to intensifying competition, investors may want to weigh these red flags carefully before betting on the stock’s next move higher.
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So far in 2026, SOUN stock is up more than 11%, driven largely by fresh optimism following its latest product showcases and partnership announcements at CES 2026. Meanwhile, rising Wall Street attention and bullish analyst forecasts have further supported the stock’s momentum into 2026.
Let’s dig deeper.
1. Intense Competition
SoundHound AI creates voice technology that lets apps, devices, and cars understand and respond to people naturally. The voice AI market is highly competitive, with many players chasing the same customers as SoundHound, drawn by the industry’s rapid growth. While the overall AI landscape is large enough to support multiple winners, execution will be critical. To earn lasting investor confidence, SOUN must demonstrate consistent revenue and earnings growth while steadily improving operational efficiency.
Looking ahead, SoundHound AI is scheduled to report its Q4 2025 earnings on February 26. The company expects full-year revenue to come in between $165 million and $180 million, nearly doubling from $84.7 million in 2024.
2. Valuation Concerns
SOUN’s valuation remains a key risk. The stock trades at a steep price-to-sales multiple, signaling high growth expectations but leaving little margin for error. Any slowdown in execution or intensifying competition could pressure the stock.
Notably, SOUN’s trailing 12-month price-to-sales ratio stands at 29.53, far above the sector average of 3.58.
3. Profitability Issues
SoundHound struggles with profitability as high operating costs outpace revenue growth, leading to persistent losses and negative cash flow. Net loss widened to $351.1 million in 2024, up 283% from 2023, largely due to a $222.6 million fair value adjustment from recent acquisitions.
In the latest quarter, adjusted net loss was $0.03 per share, better than analysts’ $0.09 estimate and an improvement from $0.04 a year earlier.
What Is the Price Target for SOUN?
Despite these risks, SoundHound AI’s long-term outlook remains positive, with analysts on Wall Street cautiously optimistic.
According to TipRanks, SOUN stock has received a Moderate Buy consensus rating, with five Buys and two Holds assigned in the last three months. SoundHound’s average stock price target is $16.60, suggesting a potential upside of almost 50% from the current level.
