SoundHound AI Surges on Earnings, Nvidia Sale Impact Weighed

SoundHound AI shares rise 15% after earnings beat expectations. Adjusted loss of $0.05 per share is overshadowed by 85% revenue growth and increased 2025 guidance amid concerns over Nvidia's stake sale.

Date: 28-02-2025

AI Rating: 7

Performance Overview: The report indicates that SoundHound AI reported an adjusted loss of $0.05 per share in the fourth quarter, with sales reaching $34.5 million. However, the company’s shares have soared by 15% due to beating expectations and raising guidance for 2025.

Revenue Growth: A key highlight is the significant revenue growth of 85% year-over-year revealed in the report. This growth positions SoundHound AI favorably against competitors and boosts investor confidence. With management raising revenue guidance to $167 million for 2025, this implies that the company expects sustained growth, potentially doubling sales from 2024 results.

Impact of Nvidia: The report mentions that NVIDIA previously purchased shares in SoundHound, contributing to a rise in its stock price last year. However, Nvidia’s recent sell-off of its shares has caused temporary instability, leading to a sell-off. CEO Keyvan Mohajer’s comments addressing this sell-off as an overreaction indicate a strategy to reassure investors about the company’s future prospects despite Nvidia's actions.

Valuation Concerns: While the growth metrics are promising, there is a concern regarding the company’s valuation, with a forward price-to-sales ratio of approximately 25, indicating that shares are trading at a premium. This could suggest that the market has high expectations for future performance.

In summary, while the adjusted loss per share is a negative aspect, the significant revenue growth and revised guidance presents a more positive outlook. Investors should consider the potential for volatility due to external factors, such as Nvidia’s stake movements, coupled with the high valuation that could limit upside in the short term.

Stocks: SOUN NVDA