Do you buy Soundhound AI stocks?

I’ve been able to withstand Soundhound AI (soun 2.70%)) Almost a year. I love what the company does and see the incredible long-term value of stocks, but since the meme stock price surged in December 2024, the stock price has been way too plentiful.

The worst of last year’s overheating has subsided, and Soundhound AI continues to move towards business outcomes. Is a good investment at this point?

Let’s take a look.

Soundhound AI with numbers

I cannot ignore one simple fact. This is still an expensive stock.

Soundhound AI trades on 38x trailing sales, and its profits are consistently negative. That is, the company reported an operating loss of $78 million in the second quarter of 2025, based on topline revenue of $42.7 million.

Some of that financial pain comes from non-cash accounting adjustments, but other line items have some actual content. The cost of revenue increased from $5 million to $26 million. Sales and marketing costs have almost tripled.

As a result, Soundhound AI is also burning real cash. Operating cash flow was $18.5 million. Therefore, the company maintains a robust cash reserve with all its fairness (and builds a robust cash reserve) by selling new stocks while it is expensive.

And that’s not really good news for existing shareholders like you. The diluted She account rose 21% last year, impairing effective stock returns at a similar percentage.

Can you put the crushed downside on top of the Soundhound AI upside down?

So far, it’s not that good. Soundhound AI stock trades at a price that induces nosebleeds despite low earnings and deep bottom line losses. So, what are the advantages of this AI stock?

Soundhound AI is growing at a fierce pace. Second quarter revenues more than tripled from the previous year, so the rapidly increasing management expenses are a necessary increase. Also, thanks to the combination of high stock prices and cash boosts of bulk sales of new stocks, Soundhound AI keeps partnerships, acquisitions and product development projects out of reach.

Furthermore, most of the rising sales are associated with long-term service transactions or subscription-style agreements. The company reported order reservations for each quarterly business update, but lastly reported with a $1.2 billion unfilled contract by the end of 2024. This volatile shift in metrics causes management to report only at the end of each future fiscal year.

But this is the meat and potatoes from Soundhound AI’s revenue growth recipe. This is a balance of billions of dollars of subscriptions, converted to actual revenue over multiple years. By including this future revenue pile in market and value calculations, Soundhound AI stocks become more attractive. Today, with a market capitalization of $5 billion, the stock trades at around 4.2 times the latest backlog balance.

Do you need to buy, sell, or retain Soundhound AI today?

Soundhound AI’s business is growing dramatically. AI-driven voice control can be useful for automakers, drive-through window services and phone-based menu systems, simply by name a few target markets. You can imagine the company has evolved into a tech giant with a large market footprint, but it may take years to reach its peak.

In the meantime, there can be a lot of things wrong. Heavy stock dilutions are one of the troublesome concerns. And while Soundhound AI technology is at the top of today, what if someone else develops an equal or stronger alternative? If this hypothetical rival begins to gain all the business opportunities available, it could drain a very important order backlog.

So today is a risky investment and I don’t think market makers occupy these potential shortcomings in Soundhound AI’s current assessment. I’m not selling existing stocks, but I don’t even have access to the “Buy” button. At this point, the Soundhound AI falls into the middle of the classic Buy, Hold, or Sales Rating Scale. Your mileage may vary depending on your appetite for unprofitable sales growth.