1 Growth Stock Down 45% to Buy Right Now
Key Takeaways
Artificial intelligence (AI) stocks are some of the hottest names on Wall Street. Palantir nologies and Nvidia have ridden the AI wave to amazing heights, surging by 900% or more...
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July 11, 2025
06:42 AM
The Motley Fool
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Artificial intelligence (AI) stocks are some of the hottest names on Wall Street
Palantir nologies and Nvidia have ridden the AI wave to amazing heights, surging by 900% or more in just a few years
However, it's still possible to find AI stocks that are not at all-time highs
For example, SoundHound AI (SOUN -3. 01%) is almost 50% off its all-time high
Image source: Getty Images
What does SoundHound AI do
The company is leader in the development and deployment of voice-powered AI systems
These tools allow users to communicate with AI tools using speech
In particular, SoundHound offers two key ducts: Houndify and SoundHound Chat AI
Houndify is a system that allows es to integrate conversational and contextual speech into their AI-powered tools
One of the best examples of Houndify in action is Hyundai's in-vehicle AI system
Passengers can ask the vehicle "Do I need an umbrella today. " and the vehicle will recognize that the person is really asking "Will it rain today. " SoundHound Chat AI integrates with large language models such as ChatGPT
Similar to Houndify, it vides context, cutting down on the need for awkward phrasing or highly detailed requests or queries
This, in turn, reduces friction and imves the quality and speed of communication between people and AI systems
Users that deploy SoundHound Chat AI can build advanced conversational assistants, imving their adoption of agentic AI and increasing their organization's efficiency
Where is SoundHound stock going
The first thing to note is that SoundHound is a tiny company compared to many of the giants involved in AI
It has a market cap of less than $5 billion
For comparison, Palantir, another leading AI stock, has a market cap of more than $300 billion
For SoundHound to increase its market cap, it will need to imve several key metrics, starting with revenue
Over the last 12 months, has generated slightly more than $100 million in sales
Quarterly revenue has increased 150% year over year
According to estimates compiled by Yahoo
Finance, sell-side analysts expect the company's annual revenue to increase to $160 million this year and $203 million in 2026
If it can reach those revenue targets, its stock should perform well
But there are risks to owning it
For starters, the company isn't fitable
Over the last 12 months, SoundHound has reported a net loss of $188 million
Moreover, free cash flow has also been in the red, at $107 million
And while the company does have around $250 million in cash on its balance sheet, that only gives it two years at its current burn rate before it will need to access additional funds via the debt market
Furthermore, the competitive landscape for AI is fierce
Large, deep-pocketed players Alphabet, Meta Platforms, Amazon, Microsoft and others are all plowing tens of billions into AI in an attempt to gain a competitive advantage
Given its small size, it's possible SoundHound could be pushed to the side by the larger players
On the other hand, it's also possible that it could be gobbled up by one of those giants -- the competitive AI market cuts both ways
Is SoundHound stock a buy now
Let's get one thing : SoundHound stock isn't for every investor
Given the company's lack of fits and the inherent volatility of the AI sector, it remains risky
However, it's unwise to overlook the company's potential
AI adoption is growing fast, and organizations are eager to implement voice AI that can imve customer satisfaction
So, while SoundHound AI remains risky, it could be a smart choice for growth-focused investors willing to keep their total exposure small
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors
Jake Lerch has positions in Alphabet, Amazon, and Nvidia and has the ing options: long January 2026 $10 calls on SoundHound AI and long July 2025 $425 puts on Microsoft
The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Palantir nologies
The Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft
The Motley Fool has a disclosure policy.
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