Shares of SoundHound AI (SOUN 15.86%) have been beaten up in the first two months of the year. The stock broke out last year, but entered today down more than 50% so far in 2025. The provider of voice artificial intelligence (AI) solutions announced a fourth-quarter adjusted loss of $0.05 per share, with sales of $34.5 million.

However, the stock is soaring today, as the company beat expectations and management also raised 2025 guidance. At 11:30 a.m. ET, shares were trading slightly off the morning high, up by 15%.

The Nvidia impact

One reason SoundHound stock took off last year was word that AI leader Nvidia purchased shares in the fall of 2023. Investors likely wondered if that would lead to a more formal partnership between the companies. But in the latest Securities and Exchange Commission (SEC) filing of its holdings, Nvidia showed it had sold all of its SoundHound stock. That report in February triggered a sell-off in the stock.

But today's earnings report has investors pouring back in. Revenue jumped 85% year over year in 2024, coming in at the high end of the company's guidance range. Management also raised revenue guidance for 2025. The midpoint of its new range -- $167 million -- implies sales will accelerate in 2025 and could double from 2024 results.

SoundHound CEO Keyvan Mohajer also tried to soothe investor concerns over Nvidia's share sale. He called the stock sell-off an overreaction. In an interview with Barron's, he suggested that Nvidia's investment may have been to help create an ecosystem and an alliance, which it had already accomplished.

What's next for SoundHound?

It's promising that the company had record revenue in the fourth quarter and sees accelerating growth this year. But even with the recent decline, shares are still selling at a premium. SoundHound's forward price-to-sales (P/S) ratio stands at about 25. That's an extremely high valuation and more than takes into account next year's growth and beyond.