SoundHound AI Inc (SOUN) stock surged 8.65% in pre-market trading on Wednesday, despite the company's lackluster performance at the recently concluded CES 2025 event in Las Vegas. The surge seems to be driven by investors focusing on SOUN's long-term growth prospects and reasonable valuations, despite the setback at CES.

According to reports, SOUN's much-hyped voice commerce technology received negative reviews at CES, with critics labeling it as energy inefficient and including it in the "worst in show" list. However, analysts have not revised their revenue estimates lower, suggesting the weakness may be driven more by retail investor sentiment rather than fundamentals.

SOUN is expected to deliver a revenue CAGR of 55% over the next two years and turn EBITDA positive by the end of 2025. With the stock trading at around 29 times forward sales, its valuations appear reasonable. However, concerns remain about SOUN's high computing power requirements for its voice tech, lack of timelines on potential deals with automakers, and sustainability questions around its impact on wastage and packaging.