SoundHound AI Stock Is Down 27% in 2025. Where Could It Be at the End of 2026?

Key Points

• SoundHound AI's conversational artificial intelligence applications are used by some of the world's largest companies.

• SoundHound's revenue is on track to nearly double in 2025, but its growth is forecast to slow significantly in 2026.

• SoundHound stock trades at a sky-high valuation, which could be a barrier to further upside next year.

• 10 stocks we like better than SoundHound AI ›

SoundHound AI (NASDAQ: SOUN) is a specialist in conversational artificial intelligence (AI). Some of the biggest brands in the world have adopted its software, propelling its stock to gain more than 835% in 2024. But it hasn't performed so well in 2025, with a 21% decline so far.

SoundHound's momentum faded after investors learned that Nvidia (NASDAQ: NVDA) sold its entire stake in the company at the end of last year. The chip giant had only been a shareholder for around one year, but its presence put SoundHound on Wall Street's radar, so the exit cast doubt over the company's future prospects.

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With that said, SoundHound's revenue is on track to nearly double this year, and since conversational AI software is becoming smarter and more capable, demand is unlikely to slow any time soon. Therefore, could SoundHound stock find its feet in 2026 and deliver a positive return?

Image source: Getty Images.

A leader in conversational AI

SoundHound's conversational AI applications are specifically designed to interpret voice prompts and respond in kind. They are in high demand from businesses in many different industries, including hospitality, automotive manufacturing, healthcare, and financial services, to name a few.

Quick-service restaurant chains like Papa John's, Chipotle, and Krispy Kreme use SoundHound's Voice AI technology to accept customer orders in the drive-thru, in-store, and over the phone. Some of them also use the company's Employee Assist tool, which stands ready to help workers fulfill orders, understand store policies, and more.

Financial institutions like BNP Paribas are using SoundHound's Amelia platform to craft custom AI agents, which can autonomously help customers with many different queries, from simple money transfers to stolen credit cards. Agentic AI could be SoundHound's largest ever opportunity because Marc Benioff, who founded Salesforce, says the market for digital labor (or AI agents) could eventually be worth somewhere between $3 trillion and $12 trillion.

SoundHound's revenue growth is forecast to slow in 2026

SoundHound generated $42.6 million in revenue during the second quarter of 2025 (ended June 30), which was an eye-popping 217% increase from the year-ago period. As a result, the company increased its revenue forecast for the full year from $167 million to $169 million (at the midpoint of the guidance range) -- almost double the $84.7 million it generated in 2024.

But SoundHound's growth is a direct result of its aggressive investments in acquisitions and operating costs, which are aimed at expanding its business as quickly as possible. As a result, the company is losing a lot of money at the bottom line, including $74.7 million on a generally accepted accounting principles (GAAP) basis during the second quarter alone.

The Q2 loss included a one-off, $31 million hit from a liability associated with one of its acquisitions. However, even after stripping that out, along with every other one-off and non-cash expense, SoundHound still lost $11.8 million during the quarter.

Wall Street thinks the company will narrow its losses in the new year, but it might have to sacrifice its rapid revenue growth to do so. According to Yahoo! Finance, analysts believe SoundHound's 2026 revenue will come in at $214 million, which would represent a decelerated growth rate of just 29% compared to the expected 2025 result.

Can SoundHound stock deliver a positive return in 2026?

Despite its 27% year-to-date decline, SoundHound stock isn't cheap right now. It's trading at a price-to-sales (P/S) ratio of 43.3, which is a staggering 62% premium to Nvidia's valuation:

Data by YCharts.

Nvidia is arguably the highest quality AI company in the world with growing revenue, surging profits, a rock-solid balance sheet, and a track record of success that spans decades. SoundHound, on the other hand, is effectively a startup, and given its lumpy growth and substantial losses, I don't think it deserves a premium valuation to Nvidia.

Moreover, SoundHound only has $230 million in cash and equivalents on hand. This means if it doesn't reduce its losses soon, it might have to conduct a capital raise in the future, which could dilute existing investors.

Given SoundHound's hefty valuation and the prospect of slower revenue growth in 2026, I think its stock could lose even more ground next year, so investors who are expecting a positive return might be left feeling disappointed.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nvidia, and Salesforce. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.