SoundHound AI (SOUN 0.89%) stock is seeing strong gains in Tuesday's trading. The conversational artificial intelligence (AI) company's share price was up 2.2% as of 10:30 a.m. ET, amid a gain of 0.2% for the S&P 500 (^GSPC 0.13%) and a gain of 0.3% for the Nasdaq Composite (^IXIC 0.10%). The stock had been up as much as 12.4% early in the session.

After some big sell-offs early in 2025's trading, SoundHound AI stock is surging today thanks to some bullish macroeconomic news. But while the company's share price is getting a boost, there is some news about competitive developments in the automotive conversational AI space that appears to have caused the stock to give up some of its early gains.

SoundHound AI stock surges on latest inflation report

Following some bearish macroeconomic indicators that prompted big sell-offs for growth stocks, investors actually got some bullish macro news today. The Bureau of Labor Statistics (BLS) published its Producer Price Index (PPI) report, and the data came in better than anticipated. The PPI, which tracks prices received by domestic producers for their output, showed a year-over-year increase of just 0.2% in December. Meanwhile, the average economist estimate had called for a 0.4% increase in the month.

The lower-than-anticipated PPI data has delivered some comforting news for investors on the inflation front. Last week, the BLS published a report showing that 256,000 jobs had been added in December -- but economists had only forecast 155,000 job additions for the month. The report raised inflationary concerns and prompted big valuation pullbacks for SoundHound AI and other growth stocks, but valuations are now seeing some rebound number thanks to the PPI report.

What comes next for SoundHound AI?

Mercedes-Benz announced today that it had selected Alphabet's conversational AI platform for its Mercedes CLA car and other vehicles. Alphabet's Automotive AI Agent platform runs through its Google Cloud infrastructure network and will be paired with a new operating system and upgraded virtual assistant. Alphabet's moves in the space highlight the potential for SoundHound AI to face rising competition in one of its core markets, and may have caused the software specialist's stock to give up some of its early gains today.

Tomorrow, the BLS will publish its Consumer Price Index (CPI) report -- and the related read on inflation will likely spur big movement for stocks again. CPI reports have recently been even bigger market movers than the PPI reports, and investors will be looking to the report to weigh the macroeconomic backdrop for growth stocks.

With the company valued at roughly $4.8 billion and trading at approximately 29 times this year's expected sales, SoundHound AI has a growth-dependent valuation that predisposes its stock to big swings on macro news. Today's PPI report suggests that investors could also be getting good news with tomorrow's CPI data, but there are also no guarantees the report will be similarly bullish.