The Hidden Worries of SoundHound AI: The Loss Black Hole Under the Halo

The voice AI unicorn SoundHound AI(NASDAQ: SOUN) has recently made headlines. Q3 revenue rose by 68% year-on-year to $42 million, and the founder has raised the full-year guidance for 2025 from $165-178 million to $165-180 million. It looks like the rise is unstoppable, right?

But there is a big problem here - the company's spending speed is twice the speed of making money.

Rise is impressive, but losses are even more severe

SoundHound focuses on audio recognition + AI, targeting a significant market: restaurant ordering, in-car assistants, financial institutions, and healthcare. The Q3 performance report is indeed impressive—three large financial service providers have added enterprise features, while two others renewed their contracts. Hospitals and insurance companies are also expanding their purchases.

The problem lies in the operating margin (Operating Margin). The company's losses are outrageously large, which really raises a question for a business that has already raised so much money.

The valuation has dropped from an astronomical price to a reasonable level, but it is still expensive.

After the sharp decline in October, the stock price has dropped 50% from its historical high. However, don't celebrate too early—before the drop, the P/S ratio was as high as 60 times, and it is still 31 times now. Although it is cheaper than before, it is still not cheap compared to the overall market.

Key Indicators for 2026: Profitability

SoundHound needs to solve a core issue to become the dark horse of AI in 2026: when can it transition from continuous losses to profitability? No matter how fast the rise is, if the money-burning hole cannot be plugged, the room for stock price rebound is limited.

Conclusion: There is product strength, but one must first prove the ability to make money.