SoundHound AI, or SOUN as the tickers so charmingly abbreviate it, has been exhibiting a certain… volatility of late. A little dance up, a rather more decisive tumble down. One suspects the upcoming earnings announcement on February 26th will provide further amusement. A rather predictable state of affairs, really.
The question, naturally, is whether one should partake in this particular game of chance? Or simply observe the proceedings with a raised eyebrow and a glass of something suitably chilled?
The Current State of Play
SoundHound, you see, possesses a rather clever little trick: voice recognition. Not the sort one encounters with the usual digital assistants, mind you. This is purportedly more… nuanced. They’ve accumulated a respectable number of patents – approximately 400, if one is counting – which, while not guaranteeing success, does create a minor impediment to rivals.
Their Polaris model, involving these large language models, is meant to improve reliability. A sensible idea, though one wonders if it isn’t simply chasing the tail of the competition. They also boast a certain discretion with user data, which appeals to some. A growing clientele beyond the automotive industry is also a point in their favour, reducing the risk of being entirely reliant on a fickle sector.
However, let’s not be delusional. At a valuation of around $3.2 billion, SoundHound remains a decidedly small player. A minnow amongst leviathans. Consider the sums being casually tossed about by Alphabet, Microsoft, and Amazon – a combined $525 billion in capital expenditures this year. A rather sobering comparison, wouldn’t you agree?
By the Numbers, Darling
Financially, it’s a mixed bag, as these things invariably are. Revenue increased by a rather impressive 127% in the first nine months of 2025, reaching nearly $114 million. Unfortunately, expenses exceeded revenue by a substantial margin, resulting in a loss of $54 million. A familiar tale, I assure you. Last year, the loss was even more dramatic – $92 million.
The forecast for Q4 anticipates around $54 million in revenue, a 63% increase. While robust growth is always welcome, such a slowdown does tend to unnerve the more sensitive investors. However, they do possess a respectable $269 million in liquidity, which should prevent any immediate scrambling for funds.
The real problem, aside from keeping pace with the titans, is the valuation. Despite the recent pullback, the price-to-sales ratio remains stubbornly high, at almost 21. It was, admittedly, approaching 60 last fall, but even now, it’s considerably above the S&P 500 average of 3.4. A rather hefty premium, wouldn’t you say? The sell-off, therefore, may well continue. One wouldn’t be surprised.
A Flutter, Perhaps?
Given the current state of affairs, one suspects that adding to one’s holdings at this juncture would be… imprudent. While their proprietary technology and rising revenue are mildly encouraging, the sheer scale of their competition and the ongoing losses remain significant concerns. The price-to-sales ratio of 21, frankly, feels a touch optimistic.
With so much uncertainty swirling about, it’s probably best to remain on the sidelines for the time being. One can always find more… reliable diversions for one’s funds. A perfectly good vintage, for instance. Or perhaps a small wager on something entirely predictable.
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2026-02-23 21:32