As Revenue Continues to Surge, Is SoundHound Stock a Buy?

SoundHound AI (NASDAQ: SOUN) continues to present exceptional gross growth, though its banal terms has been much than chopped successful fractional since October. Let's instrumentality a adjacent look astatine the artificial quality (AI) voice-focused institution to spot if present is simply a bully clip to bargain the stock.

SoundHound erstwhile again saw its gross surge successful the 4th quarter. More importantly, absorption besides provided an upbeat full-year outlook for fiscal 2026, expecting gross of betwixt $225 cardinal and $260 million. That would equate to maturation of betwixt 33% and 54%. It expects gross to ramp up done the year, arsenic it is seeing renewals travel with agentic solutions, which travel with a terms summation and sometimes ample measurement commitments.

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For Q4, SoundHound's gross jumped 59% twelvemonth implicit twelvemonth to $55.1 million. Its 2025 revenue, meanwhile, astir doubled. That came successful supra the $54 cardinal expert consensus.

The company's adjusted nett net per stock successful Q4 improved from a nonaccomplishment of $0.05 past twelvemonth to a nonaccomplishment of $0.02 this year, portion its adjusted net earlier interest, taxes, depreciation, and amortization (EBITDA) was a nonaccomplishment of $7.4 million, compared to a nonaccomplishment of $16.8 cardinal a twelvemonth ago. It had an operating currency outflow of $27.2 cardinal successful the 4th and $98.2 cardinal for the year. It ended the twelvemonth with $248 cardinal successful currency connected its equilibrium expanse and nary debt.

Its gross margins proceed to spot improvement. Per mostly accepted accounting principles (GAAP), gross margins soared 800 ground points from 39.9% to 47.9% twelvemonth implicit twelvemonth and 530 ground points from 42.6% successful Q3. Adjusted gross borderline expanded 840 ground points twelvemonth implicit twelvemonth to 60.5% and was up from 59.2% successful Q2.

Looking ahead, the institution said it believes it tin beryllium a 70%-plus gross borderline concern with 30% EBIT margins. While it did not springiness profitability guidance, it said it was entering a caller break-even signifier aft years of dense investment.

Trading astatine a price-to-sales (P/S) aggregate of astir 16 times the 2026 gross statement expert estimate, SoundHound's banal is not cheap. Meanwhile, it hasn't yet turned a profit, nor is it generating escaped currency flow. That makes it a speculative stock.

However, the institution is increasing its gross quickly, and it does person 1 of the much intriguing opportunities successful agentic AI. If you are going to person AI agents that interact with radical successful areas similar lawsuit service, companies are going to privation their AI agents to pass much people and recognize intent truthful arsenic not to frustrate customers. That's what SoundHound's AI level is meant to do, truthful it has a immense accidental successful this area. Nonetheless, I'd lone see a tiny presumption fixed its valuation and would similar it connected a pullback.