Why SoundHound AI Just Lost 10.5% of Its Value—Here’s What You Need to Know

Shares of SoundHound AI, Inc. (NASDAQ: SOUN) took a sharp downturn this week, falling 10.5% to close at $8.72, as trading volume declined significantly. The stock hit an intraday low of $8.67, marking a steep drop from its previous close of $9.74. Investors appear to be showing hesitation toward AI stocks, as broader market conditions remain uncertain.

Sharp Drop in Trading Activity

One of the key reasons behind SoundHound’s latest stock drop is the noticeable decline in trading volume. The company saw only 12.5 million shares traded, a massive 70% decrease compared to its average daily volume of 42 million shares. This signals a pullback in investor interest and potential concerns about short-term volatility in the AI sector.

Analyst Opinions Remain Divided

Despite the dip, Wall Street analysts remain split on SoundHound AI’s prospects:

• DA Davidson raised its price target from $9.50 to $13.00 and issued a “buy” rating, suggesting optimism about the company’s AI-driven business model.
• Wedbush took a more bullish stance, raising its price target from $10.00 to $22.00 with an “outperform” rating, highlighting SoundHound’s potential in the AI-powered voice assistant space.
• On the other hand, Barclays and Ladenburg Thalmann maintained “neutral” ratings with a $7.00 price target, signalling concerns about short-term performance.

The consensus among analysts places the average target price at $12.86, meaning some still see significant upside potential despite the latest downturn.

Financial Struggles Adding to Market Uncertainty

SoundHound AI recently reported a loss of $0.69 per share, which was far worse than analysts’ expectations of a $0.11 per share loss. However, there was a silver lining—revenue came in at $34.54 million, slightly beating Wall Street’s estimate of $33.70 million.

While the revenue growth is promising, the company’s wider-than-expected losses may have spooked investors, leading to the recent decline in share price and trading activity.

What’s Next for SoundHound AI?

As AI stocks continue to experience high volatility, SoundHound AI’s ability to expand its market reach and improve profitability will be critical in determining whether this recent dip is a temporary setback or a sign of deeper concerns.

Investors will be watching closely for new partnerships, product launches, and improved financial performance to regain confidence in the stock. Until then, SoundHound AI remains one of the most closely watched AI companies on the market.