SoundHound AI (SOUN -5.86%) delivered a blowout fourth-quarter earnings report to cap off a transformative year. The voice artificial intelligence (AI) pioneer posted a spectacular 101% year-over-year increase in revenue for the period ended Dec. 31, while the adjusted earnings-per-share (EPS) loss of $0.05 was narrower compared to the $0.08 loss Wall Street estimated. The results were strong enough for management to raise its full-year 2025 growth outlook, projecting confidence for further operating momentum.

The update is welcome news for shareholders who have faced a roller coaster of volatility, as the stock is down about 45% year to date, following a monster rally in late 2024. Are shares of SoundHound AI a buy now? Here's what you need to know.

Agentic AI leadership

Artificial intelligence remains a major stock market investing theme in 2025, with companies rapidly embracing the technology to automate workflows, improve productivity, or enhance customer experience. While much of the magic happens behind the scenes through machine learning and large language models (LLMs), SoundHound AI stands out as a leader in the emerging field of conversational AI.

The company's intuitive voice-powered AI communications solutions support 25 languages and offer significant advantages over text-based interfaces. SoundHound AI has found success partnering with leading automakers integrating the company's in-vehicle assistant with generative AI capabilities as central to the infotainment and vehicle intelligence systems. The proprietary technology is also found in several consumer devices such as smart TVs and appliances.

Image source: Getty Images.

Perhaps the biggest development over the past year has been the company's momentum in agentic AI customer service and employee experience applications as a new growth driver. In this case, AI agents respond to complex inquiries, autonomously performing tasks and making decisions on behalf of users. The practical use cases cover everything from restaurant ordering and phone answering systems to potentially replacing entire call center operations.

Comments by CEO Keyvan Mohajer highlighted how these new capabilities should continue to see accelerated demand that the company is well-positioned to capture. During the Q4 earnings conference call with investors, Mohajer said:

Agentic AI introduces a new dimension to our platform, expanding its capabilities and impact. It is an inevitable evolution in AI functionality for our customers. This evolution comes as AI adoption moves from experimentation to necessity. Businesses are rapidly embracing AI. And as they do, SoundHound is in a position of strength.

A strong growth outlook

When thinking about SoundHound AI as a possible investment opportunity, the numbers speak for themselves. 2024 revenue reached $84.7 million, an increase of 85% from 2023. More impressive is the expectation for an even stronger annual growth rate this year with the company targeting 2025 revenue between $157 million and $177 million, an annual increase of 97% at the midpoint.

Management is citing a cumulative subscriptions and bookings backlog of nearly $1.2 billion as a measure of customer activity based on contracts signed, offering a snapshot of the revenue it expects to realize over the coming several years. While the business is not currently profitable, management expects to achieve positive adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) by the end of this year. The sense is that SoundHound AI is still in the early stages of a significant market opportunity leveraging its disruptive voice-powered agentic AI platform.

That runway helps to justify the premium valuation for shares of SoundHound AI trading at 26 times its 2025 revenue estimate. While the level is objectively pricey relative to the broader stock market and even AI leader Nvidia, at a forward P/S ratio of 15, investors will be hard-pressed to find a different stock with the level of growth SoundHound AI is presenting.

SOUN PS Ratio (Forward) data by YCharts

My take: A buy-the-dip opportunity

There's a lot to like about SoundHound AI as a differentiated pure-play AI software company. Considering the latest update, which reaffirmed the company's potential, I believe the stock is ready to resume its upside trajectory. It likely won't be a straight line higher, but investors willing to weather some stock market volatility can find a place to buy SoundHound AI shares for a diversified portfolio.