SoundHound Inc.’s stock experienced a significant drop in valuation during the first half of this year, with its share price decreasing by approximately 45.9%. This decline occurred despite a rise of 5.5% in the S&P 500 index over the same period.
SoundHound’s decrease in valuation during the first half of 2025 was partly due to the substantial growth the stock experienced in 2024. Additionally, some broader economic and company-specific factors prompted investors to offload shares. However, the stock has also been performing exceptionally well in recent trades.
Why SoundHound AI stock sank in 2025’s first half
2021 has been challenging for SoundHound AI, as the company experienced a significant drop in valuation following the release of DeepSeek’s R1 model by a Chinese AI firm. Additionally, SoundHound AI’s stock prices dipped during this year’s Consumer Electronics Show (CES).
It was anticipated that the company would unveil innovative products or collaborations at CES, but the event ended up delivering less promising signs. Nvidia, specifically, disclosed plans to extend its reach in the area of agentic AI, which SoundHound AI sees as a significant market for expansion.
After Nvidia announced it had sold off its shares in SoundHound AI, this news led to another significant drop in SoundHound’s stock price. In February, Nvidia, a key player in AI hardware, reported its portfolio holdings to the Securities and Exchange Commission (SEC), which disclosed that Nvidia had divested from SoundHound AI. Previously, Nvidia’s investment had been instrumental in boosting SoundHound AI’s valuation, so the announcement of this sale triggered a massive sell-off for SoundHound AI.
In May, the company’s stock experienced an upward surge following the announcement of its first-quarter earnings. The sales figures jumped 151% compared to the same period last year, reaching a total of $29.1 million. During this period, the business reported a non-GAAP (adjusted) loss of $0.06 per share. Remarkably, the quarter’s revenue surpassed market expectations, causing the stock price to rise after the financial report was released.
What’s next for SoundHound AI?
Stock prices for SoundHound AI have been climbing in July’s market activity, with investors increasingly favoring growth-oriented shares. The company’s share value has risen approximately 8% during the month to date.
SoundHound AI predicts its annual sales to fall between $157 million and $177 million this year. Reaching the middle of this range would equate to an approximately 97% increase in revenue compared to the $84.7 million earned last year. This growth rate would also represent a significant speedup over the 85% annual sales growth achieved by the company last year.
With an estimated valuation of around 29 times this year’s projected revenue, SoundHound AI carries a valuation that is heavily reliant on growth. However, the growth trajectory of its services has been noteworthy thus far.
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2025-07-16 22:12