Voice AI stock climbs on improved results
Shares of SoundHound AI (NASDAQ:SOUN) shot up 10.11% to $7.08 on Thursday, marking a strong performance. The stock gained traction following better-than-expected financial results, including a record revenue quarter and a reduced loss. Trading activity saw a notable increase, with 88 million shares exchanged, significantly surpassing the average of 30.7 million shares traded in the past three months.
Second-quarter revenue rose 45% compared to the same period last year, setting a new company milestone. The adjusted net income margin improved from -28% to -15%, signaling better cost control. Management raised its 2026 sales forecast to $245 million at the midpoint, a figure that could grow further if the proposed acquisition of LivePerson is finalized.
Despite the progress, SoundHound AI still faces hurdles. Stock-based compensation currently accounts for 45% of its revenue, which remains a concern for cost efficiency. However, the company continues to secure contracts across various industries, such as finance, healthcare, and telecom. It maintains a strong focus on the automotive sector as well.
Currently, the stock trades at approximately 11 times forward sales. Analysts suggest the company needs to maintain its rapid growth while continuing to improve its profit margins. To manage risk, investors are advised to build positions gradually rather than making a large, immediate investment.
Broader market trends for the day showed mixed results, with the S&P 500 (SNPINDEX:^GSPC) losing 0.16% and the Nasdaq Composite (NASDAQINDEX:^IXIC) slipping 0.06%. In the conversational AI space, SoundHound AI outperformed peers like Cerence (NASDAQ:CRNC), which closed lower by 2.17% at $9.02.
Although the stock has declined 6% since its 2022 IPO, this latest performance highlights improved operational efficiency and growth potential. For investors, the key is to assess whether the company can maintain this trajectory while managing expenses more effectively.