Harsh Chauhan, The Motley Fool

Wed, Jun 25, 2025, 7:00 AM5 min read

• SoundHound has pulled back sharply this year, but it could be an opportunity to buy a solid growth stock.

• It's expanding at a faster pace than the overall voice AI market, which is expected to witness strong growth.

• The stock could deliver terrific gains to investors by capturing a bigger share of this lucrative market.

• 10 stocks we like better than SoundHound AI ›

It can be sobering for investors when a stock sheds some 50% of its value. That's exactly what has happened to shares of SoundHound AI (NASDAQ: SOUN) so far in 2025. This is likely thanks to a combination of factors, including an expensive valuation following last year's stunning rally, overall negativity in the stock market due to the tariff-fueled trade war, and the ongoing conflict in the Middle East.

The good thing is that shares of the voice artificial intelligence (AI) specialist can now be bought at a relatively cheaper valuation. So should investors buy the stock in anticipation of more upside? Or would it be a good idea to stay away despite its pullback? Let's find out.

Six of the nine analysts covering SoundHound suggest buying it right now, while the remaining three have a hold position on the stock. What's worth noting here is that SoundHound's 12-month price target of $12 points toward a potential upside of 25% from current levels. That's despite the stock's hefty price-to-sales ratio of 34.

Of course, the stock is relatively cheaper when compared to its sales multiple of 90 at the end of 2024, but it's still richly valued when compared to the U.S. technology sector index's sales multiple of 8. Even then, analysts are expecting SoundHound AI to jump nicely in the coming year.

That's not surprising. The massive opportunity in the voice AI solutions market has supercharged the company's growth, which is why it is expected to justify its valuation.

SoundHound is scratching the surface of a huge end-market opportunity. According to one estimate, the voice AI solutions market was worth an estimated $5.4 billion last year, growing 25% from the prior year. The market is expected to grow at a faster pace in the future, recording annual growth of 30% through 2029 and generating $50 billion in annual revenue.

The company has been expanding at a much faster pace than its end market. Its first-quarter revenue shot up a phenomenal 151% from the year-ago period. Its revenue guidance of $157 million to $177 million indicates that its top line is on track to double from 2024 levels. However, it wouldn't be surprising to see SoundHound blowing past its guidance, as its voice AI solutions are gaining traction in several industries.