SoundHound AI Inc. (SOUN) stock surged 5.10% in intraday trading on Wednesday, March 5, as the company's strong fourth-quarter results and rapidly growing agentic AI business fueled investor optimism about its growth prospects.
The voice AI pioneer reported exceptional financial performance for the quarter ended December 31, 2024, with revenue soaring 101% year-over-year to $34.5 million, outpacing expectations. Driven by robust demand for its conversational AI solutions, SoundHound raised its full-year 2025 revenue guidance to the range of $157 million to $177 million, implying an annual growth rate of around 97% at the midpoint.
A key highlight of the earnings update was the company's momentum in agentic AI applications, which allow AI agents to respond autonomously to complex queries and perform tasks on behalf of users. This emerging AI dimension is expanding SoundHound's platform capabilities and impact, positioning the company to capture accelerated demand as businesses rapidly embrace AI technology.
Despite a recent decline in gross margins due to acquisitions, SoundHound expressed confidence in driving operational efficiencies to restore its margins to historical high levels above 70%. The company aims to achieve positive adjusted EBITDA by the end of 2025, supported by a cumulative subscriptions and bookings backlog of nearly $1.2 billion.
Following a deep selloff earlier in 2025, potentially triggered by Nvidia's sale of its SoundHound stake, the stock now appears attractively valued for its robust growth prospects. With a forward price-to-sales ratio of around 26, SoundHound AI offers investors exposure to a differentiated pure-play AI software company in the booming agentic AI space, albeit with inherent volatility.
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