Is SoundHound Poised for Global AI Growth Amid Auto Tariff Pressures?

SoundHound AI SOUN is rapidly emerging as a global contender in conversational and agentic AI, fueled by wins in automotive, restaurants and enterprise markets. The company’s Amelia 7 platform is migrating 15 large enterprises to agentic AI, while its restaurant solutions are now deployed in over 14,000 locations. In autos, SoundHound secured a major deal with a Chinese OEM and expanded its generative AI features across leading brands in North America and Europe.

These strategic gains highlight the company’s growing ecosystem. Its proprietary Polaris foundation model, which outperforms rivals in accuracy and latency, underpins cross-selling opportunities, from customer service in restaurants to in-vehicle voice assistants. Voice Commerce pilots with global automakers and merchants are advancing, potentially creating a new revenue stream as consumers order food, coffee, or services directly through connected cars.

Still, challenges persist. Tariff pressures in the auto sector may indirectly weigh on royalty revenues tied to vehicle shipments. Financially, SoundHound continues to operate at a loss, with a GAAP gross margin of 39% and a net loss of $74.7 million. However, management expects cost synergies from acquisitions and cloud optimization to support margin improvement, with adjusted EBITDA profitability targeted by late 2025.

With $230 million in cash and no debt, SoundHound retains the flexibility to scale globally. Despite tariff-related uncertainties, its differentiated technology and expanding global partnerships suggest the company is well-positioned to capture long-term AI growth opportunities.

Competition Heats Up: Palantir and C3.ai in Focus

While SoundHound is gaining traction in voice-driven and agentic AI, it faces competition from larger peers like Palantir Technologies PLTR and C3.ai AI. Palantir has firmly entrenched itself as a government and enterprise AI leader, leveraging its Artificial Intelligence Platform (AIP) to win defense and commercial contracts. Unlike SoundHound, Palantir generates consistent profits, giving it greater financial stability to weather external shocks such as auto tariffs.

C3.ai, meanwhile, continues to build its brand as a diversified enterprise AI provider. C3.ai has focused heavily on customizable applications across energy, defense, and manufacturing, giving it a broad base of recurring customers. While SoundHound focuses on conversational AI niches like automotive and restaurants, C3.ai markets itself as a platform-first provider, aiming to scale through pre-built applications.

Both Palantir and C3.ai highlight how SoundHound must differentiate through voice AI expertise to sustain growth amid intensifying global competition.

SOUN’s Price Performance, Valuation and Estimates

SoundHound shares have gained 88.6% in the past three months against the Zacks Computers - IT Services industry’s 6.7% decline.

SOUN Price Performance

In terms of its forward 12-month price-to-sales ratio, SOUN is trading at 36.62, up from the industry’s 17.29.

Over the past 60 days, the Zacks Consensus Estimate for SOUN’s 2025 loss per share has narrowed to 13 cents from 16 cents. The estimated figure indicates an improvement from the year-ago loss of $1.04 per share.

SOUN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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