SoundHound Faces Challenges While DigitalOcean Thrives

Stock woes for SoundHound AI are evident, with a 51% drop in 2025. Conversely, DigitalOcean's growth in cloud-based AI services positions it for potential market cap gains, making it more appealing to investors.

Date: 09-03-2025

AI Rating: 5

Stock Performance of SoundHound AI

SoundHound AI has faced a significant decline of 51% in its stock price in 2025, primarily due to Nvidia's sale of its stake and the company's high valuation, set at 41 times sales. This has raised concerns among investors regarding its performance in the near term, suggesting potential further declines could follow.

Growth Metrics for DigitalOcean

In contrast, DigitalOcean is reporting promising results with a year-over-year revenue increase of 13% to $205 million in Q4 2024, alongside earnings per share (EPS) growth of 11% to $0.49. This indicates a healthy operational performance and showcases DigitalOcean's ability to capitalize on the growing demand for cloud-based AI services.

The company's average revenue per user has increased by 14%, demonstrating success in enhancing customer engagement and monetization through its offerings. The successful launch of its GPU Droplets service to support AI applications has further boosted its growth prospects.

Investors should note DigitalOcean's projected revenue for 2025 is $880 million, marking another 13% increase. Given its competitive valuation at 5 times sales compared to SoundHound's much higher level, it appears that DigitalOcean might outperform SoundHound's market cap of $4 billion. This potential alignment with the industry average price-to-sales ratio could result in a significant market cap increase for DigitalOcean, reaching an estimated $6.6 billion if growth expectations are met.

Stocks: SOUN DOCN