Prediction: SoundHound AI Will Skyrocket In the Second Half of 2025

Key Points

• SoundHound AI is a leader in AI audio recognition.

• The company's revenue increased at a jaw-dropping 151% pace in Q1.

• Management indicated that significant growth remains.

• 10 stocks we like better than SoundHound AI ›

SoundHound AI (NASDAQ: SOUN) has been a poor investment in 2025, following a tremendous 2024. It's down 35% this year, compared to soaring 835% last year. However, I think a turnaround for SoundHound AI could be on the way.

SoundHound AI has some strong tailwinds blowing in its favor, and it could be a monster winner in the second half of the year, especially if the growth figures that management projects come true.

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SoundHound AI is putting up impressive growth figures

SoundHound AI is a leader in audio recognition technology, using this information to integrate with generative AI models. Voice-activated AI models have been around for a long time (think Siri or Alexa), but often frustrated users. SoundHound AI's product represents a significant improvement over these technologies, outperforming human counterparts in both accuracy and speed.

More people might be open to using AI to replace many aspects of their lives if it meant a quicker and more seamless experience, but that hasn't often been the case. As a result, the general population may be somewhat skeptical of SoundHound's product, but its rapid growth tells a different story.

In the first quarter, SoundHound AI's revenue rose an impressive 151% year over year to $29.1 million. Management also maintained its full-year guidance of 97% year-over-year growth, which places its growth rate among the fastest in the AI realm. However, it's unusual to see a stock delivering that level of results with a declining share price. That could be because investors are concerned that too much growth is already priced into the stock.

SoundHound AI's stock isn't cheap. It trades for 41 times sales.

SOUN PS Ratio data by YCharts. PS = price-to-sales.

This level is well below where it peaked at the end of 2024, but also above where it traded throughout most of 2024. Still, 41 times sales could be a reasonable price to pay for the stock -- if it can maintain its near-100% revenue growth pace (which is incredibly difficult to do).

If SoundHound AI can maintain its doubling growth pace, the stock will be valued at around 20 times sales after one year of growth, which is the high mark for most software companies. I think that SoundHound AI can deliver strong growth in the second half of 2025 and throughout 2026, especially if it starts to convert some of its backlog.

Management could reveal what its expecting in 2026 soon

At the end of 2024, SoundHound AI's revenue backlog (a measure of how much value remains on contracts that it has signed) was $1.2 billion. Since SoundHound AI's trailing 12-month revenue just eclipsed $100 million, this indicates monster growth ahead for the company.

While management was unwilling to change its 2025 guidance during Q1, there are clear signs that SoundHound AI's 2026 growth could be just as strong as its 2025 growth. The market isn't ready for this proposition, and if management hints that 2026 growth will be just as rapid as 2025's, the stock could surge as a result.

We don't have a date for SoundHound AI's second-quarter results, but last year's Q2 results were available in early August. I'll be watching SoundHound AI's stock during that timeframe and paying close attention to what management has to say about 2026. They dropped hints regarding 2025's projections during the Q2 2024 conference call, and I expect them to do the same this year.

SoundHound AI's audio recognition product is being widely adopted, with many companies having already signed a deal with SoundHound. Now, SoundHound AI is working to recognize that revenue, which could result in significant growth for both the company and its stock.

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.