SoundHound AI Struggles Amid Lawsuits and Market Risks

SoundHound AI faces significant challenges, with shares down 63.1% YTD due to a class action lawsuit and tariffs. Despite this, analysts expect strong future growth, including a projected 97% revenue increase in 2025.

Date: 08-04-2025

AI Rating: 6

SoundHound AI (SOUN) has experienced a significant decline in its share price, down 63.1% YTD and 25% in March, largely due to a class action lawsuit and adverse impacts from global trade tensions. Investors' sentiment has been adversely affected, causing a drop in stock value.

The company is embroiled in a litigation case alleging that it misled investors regarding the integrity of its financial controls, which may lead to heightened regulatory scrutiny and financial liabilities. This could dissuade potential investors fearing potential long-term repercussions.

Earnings Per Share (EPS): The Zacks Consensus Estimate for SOUN's 2025 loss per share has been revised to 16 cents from 27 cents over the last 60 days. While this represents an improvement, it still indicates that the company may struggle to achieve profitability shortly. This adjustment reflects some optimism among analysts about the company's future profitability potential.

Revenue Growth: Despite the recent challenges, SoundHound has reported a remarkable revenue surge of 101% to $34.5 million in the fourth quarter, with expectations of revenues between $157 million and $177 million for 2025, indicating a projected 97% year-over-year growth. This expected revenue growth underscores SoundHound's potential and optimism regarding its market position.

However, it is essential to weigh these factors. The drop in stock price suggests the market recognizes the risks but may still be optimistic about the company's strategic initiatives including improved customer diversity, partnerships with key players like NVIDIA, and entry into new verticals such as healthcare and energy. These endeavors position SoundHound favorably in high-growth markets.

A broader diversification strategy has notably reduced reliance on a few clients, potentially mitigating risk and bolstering revenue streams moving forward. When considering the latest developments, the balance between risk perception from ongoing litigation and the positive revenue outlook creates a cautious but potentially lucrative investment scenario.

Stocks: SOUN GD NVDA LCID