Is SoundHound AI a Buy?

SoundHound AI (NASDAQ: SOUN) is at the forefront of the artificial intelligence (AI) market. The company's voice AI technology is used for everything from vehicle infotainment systems to drive-thru ordering kiosks at restaurants.

The stock was a market darling last year, surging 836% as soaring revenue growth attracted new investors. The stock has since pulled back, however, amid concerns about a potential economic slowdown spurred by President Trump's tariffs.

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In light of all this, is SoundHound stock a buy right now?

There are good reasons SoundHound has caught the attention of investors. First, the company is increasing sales at a healthy clip. Revenue surged 85% in 2024 to $84.7 million as SoundHound expanded its client base.

Management says it's working with over 30% of the top 20 quick-service restaurants and 70% of the top 10 global financial companies, and it has recently signed on six more Stellantis automotive brands for its SoundHound Chat AI Automotive service.

SoundHound is tapping into the fast-growing agentic AI market where artificial intelligence assists humans with things like customer service calls and online ordering. One estimate sees this market's value rising to $139 billion by 2033.

Additionally, SoundHound is in a strong financial position as it finished the year with $198.2 million in cash and no debt, which is impressive for a company still in growth mode.

Unfortunately, SoundHound's growth isn't the entire story. The company is far from profitable, and its net losses expanded last year. SoundHound finished 2024 with a non-GAAP net loss per share of $0.05, slightly worse than its $0.04 loss per share the previous year.

It's not unusual for fast-growing companies to be unprofitable, but the current economic backdrop is raising questions about how well smaller companies will fare if a recession or economic slowdown emerges.

A recent CNBC survey found that 60% of U.S. CEOs believe a recession is coming in the next six months. They aren't the only ones, either. Dozens of economists recently put the odds of a recession at 47% over the next year.

The potential for a slowdown stems from President Trump's aggressive trade policies. While SoundHound may not be directly affected by this administration's tariffs, many companies it works with are or could be. For example, automaker and SoundHound customer Stellantis has already laid off some workers and paused production at two plants in response to tariffs.