Why Is Everyone Talking About SoundHound AI Stock?

Artificial intelligence (AI) is one of the most significant trends of our generation, thanks to its transformative effects that will impact almost every aspect of our lives. Think of it as revolutionary as electricity and the internet.

Unsurprisingly, investors have been doubling down on companies well-positioned to leverage this trend, such as Nvidia, Palantir, and Tesla.

But AI will bring opportunities not only to these big tech giants but also to smaller, up-and-coming future tech giants. SoundHound AI (SOUN -1.11%) is one of them.

A leading voice AI platform

Initially founded in 2005 as a music recognition company, SoundHound has evolved into a broader AI voice platform company with proprietary technology that understands and responds to human speech in real time.

The company's value proposition, though complex to achieve, is relatively straightforward. It provides a voice platform that's embedded directly into products (such as cars) without requiring the use of cloud-based assistants like Alexa, Siri, or Google Assistant. With the help of its software, users can use voice as an interface to interact with smart devices, cars, or other Internet of Things (IoT) devices.

Leveraging its technology in voice recognition and natural language understanding, the company has built a proprietary offering that's independent of consumer tech companies like Microsoft and Alphabet. According to the company, its technology surpasses that of competitors in terms of speed, accuracy, and understanding of complex language. With its technology stack, it allows for the provision of best-in-class service while giving customers complete control over their brand, users, and data.

Additionally, SoundHound has leveraged the latest AI technologies, including generative AI, to develop its voice AI agent. The AI agent can function on smartphones, SMS, kiosks, mobile apps, and web chats, helping customers tackle a wide range of customer service activities across multiple industries. Currently, the company's main customers are automotive and hospitality businesses, quick-service restaurants, and call centers.

In return for providing its voice platform, SoundHound generates revenue primarily through three channels. First, it receives royalties on products -- cars, smart TVs, and IoT devices -- that incorporate its voice platform. Here, customers pay based on volume, usage, per device, or user. Next, it generates software-as-a-service revenue from services such as food ordering and customer service. Here, customers pay on a monthly contract or a usage basis. The last pillar of SoundHound's revenue centers around advertising and commerce, where it earns a commission by enabling sales of customer products and services.

Ample opportunity to grow

Although AI voice platform adoption may still be in its early stages, customers appreciate the solutions SoundHound provides, which explains its solid growth rate. In the first quarter of 2025, revenue grew 151% to $29.1 million. Better still, there are good reasons to expect the company can sustain its high growth trajectory for a while.

According to the company, it has a total addressable market (TAM) of $140 billion across various industries. At an annualized revenue rate of around $120 million, it has just scratched the surface.

Let's consider a few of the most apparent areas, starting with the automotive industry. SoundHound has just achieved 3%-5% penetration of its existing customers' 25 million unit sales. That's 28% of global light vehicle sales of 88 million in 2024 -- a vehicle category that may reach 95 million units in 2028. The company can increase its penetration even further by growing with existing customers or adding new client brands. To this end, the tech company's existing experience working with automakers, its leading technology, as well as its independent platform (an alternative to Alexa, Siri, or Google Assistant) are some advantages it can leverage to grow its market share.

The other obvious growth avenue is its subscription service in the restaurant industry. Increasing labor shortages, rising wages, and customer demand for fast service make voice automation an attractive tool for restaurant operators. Just in the U.S. alone, SoundHound has a revenue opportunity of $1 billion and a TAM of 0.8 million restaurants. Chipotle, Five Guys, and Casey's are a few examples of its growing list of customers.

It is also worth noting that the SoundHound voice AI platform offers solutions in 25 languages (which can expand further over time), allowing it to provide its services to customers globally. In the first quarter of 2025 alone, the company announced deals with customers in Latin America, Europe, and Japan and joined forces with Tencent Intelligent Mobility.

The sky seems to be the limit.

What it means for investors

SoundHound AI is no longer just a niche voice assistant company -- it's evolving into a mission-critical AI platform for some of the world's largest industries.

Whether it's powering intelligent voice assistants in cars, automating food orders at restaurants, or handling customer service calls with conversational AI agents, SoundHound is betting on voice recognition to be the next central interface -- and it's building a proprietary infrastructure to support its expansion.

Still, investors should be mindful that the road ahead will be rocky, especially with the adoption of new technologies like AI voice platforms. It's best to monitor the company closely to build your understanding and conviction.