SoundHound AI (NASDAQ:SOUN) stock was one of the biggest standouts in the final stretch of 2024, surging nearly 400% over the last two months of the year. The rally was driven by mounting enthusiasm for its voice AI technology and a bold move into financial services, insurance, and hospitality through its acquisition of Amelia.
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However, that euphoria didn’t last long into 2025. Investors were quick to lock in gains following the meteoric rise, and sentiment took an additional blow in February when Nvidia disclosed that it had fully exited its position in the company. As a result, SOUN shares have tumbled 44% year-to-date.
Still, SoundHound has been making the case that its business fundamentals are improving. In its Q1 2025 earnings report released in early May, the company posted $29 million in revenue – up 151% from the year before – and touted a backlog of over $1 billion in future sales.
However, one top investor, known by the pseudonym Stone Fox Capital, is raising red flags about what’s driving the numbers.
“SoundHound AI’s reported 150%+ growth is misleading, driven by acquisitions rather than true organic expansion, yet the stock trades at a premium valuation,” explains the 5-star investor, who is among the top 2% of TipRanks’ stock pros.
Stone Fox points to the company’s 2025 revenue guidance – between $157 million and $177 million – as further evidence that the growth story might be overstated. Compared to SoundHound’s pro forma 2024 revenues of $143 million, the forecast suggests limited progress, especially if results land on the lower end of the range.
That muted outlook, Stone Fox argues, could force investors to rethink the company’s lofty valuation.
“Investors should sell the stock at a very premium valuation,” concludes Stone Fox, who – no surprise here – is rating SOUN stock a Strong Sell. (To watch Stone Fox Capital’s track record, click here)
While Stone Fox’s stance is clearly bearish, Wall Street analysts are less pessimistic. Of the 7 analysts who’ve recently weighed in on SOUN, 3 rate the stock a Buy and 4 suggest a Hold. With no Sell ratings in the mix, the consensus lands at a Moderate Buy. (See SOUN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.