SoundHound AI's robust growth doesn't justify the stock's slide

SoundHound AI (SOUN -1.72%) stock has taken a severe beating so far this year, losing nearly 40% of its value as of this writing. Shares of the company that provides conversational artificial intelligence (AI) solutions to customers are now trading close to their 52-week low, but what’s worth noting is that the steep drop in SoundHound’s stock price doesn’t seem justified.

After all, SoundHound operates in the fast-growing conversational AI market, where demand for agentic AI solutions is rising rapidly. Additionally, SoundHound’s results have been solid in recent quarters, and the company is pulling the right strings to ensure that it remains a key player in the conversational AI space.

We will take a closer look at the company’s prospects in this article and check if it is worth investing $1,000 in this AI stock in anticipation of a turnaround in its fortunes.

SoundHound AI’s robust growth doesn’t justify the stock’s slide

When SoundHound AI released its Q1 results in May this year, it reported a 52% year-over-year increase in revenue to $44.2 million. The company also announced the acquisition of conversational AI solutions provider LivePerson to strengthen its voice and agentic AI offerings. This seems like a smart move that should ideally bolster SoundHound’s growth.

LivePerson’s conversational AI and customer engagement platform helps clients automate and manage customer interactions across messages, social media applications, and voice. The company serves multiple verticals, including retail, financial services, healthcare, automotive, and travel and hospitality. SoundHound notes that this acquisition is a good fit and will enhance its addressable revenue opportunity by $500 million.

The LivePerson acquisition is anticipated to close in the second half of 2026, and SoundHound estimates it will contribute at least $100 million in additional revenue in 2027 from its existing customer base. In all, SoundHound expects its 2027 revenue to land in the $350 million-$400 million range, at least. For comparison, SoundHound’s 2026 revenue is expected to land at $232 million, according to consensus estimates.

That would be a 37% increase over last year. So, SoundHound’s 2027 revenue estimate points to a significant acceleration in growth next year, though don’t be surprised to see the company exceeding expectations since the acquisition will also open cross-selling opportunities. Also, SoundHound’s focus on bolstering its conversational AI platform through the acquisition of LivePerson should strengthen its position in the fast-growing conversational AI space.

The company was recently named a leader in conversational AI by market research firm Gartner, which explains why it has been growing faster than the market it operates in. Grand View Research predicts that the conversational AI market will experience annual growth of almost 24% through 2033, growing from $17.7 billion in revenue this year to almost $79 billion at the end of the forecast period.

So, SoundHound is making the right moves to capitalize on this multibillion-dollar opportunity in the long run. Also, the potential acceleration in its revenue growth in 2027 could spark a turnaround in this tech stock following a poor performance so far this year.

In fact, analysts expect SoundHound to deliver impressive gains over the coming year, which is why it may be a good idea to invest $1,000 of your investible cash into this company.

Wall Street expects the stock to jump substantially

SoundHound AI has a 12-month median price target of $12, according to nine analysts covering the stock. That points to potential gains of 87% over the next year. What’s more, seven of the analysts covering SoundHound rate it as a buy, which isn’t surprising considering the points discussed in this article.

So, a $1,000 investment in SoundHound could be worth almost $1,900 in a year, and I won’t be surprised to see it indeed living up to Wall Street’s expectations. SoundHound’s slide in 2026 means that investors can now buy it at 14.4 times sales, a significant discount to its price-to-sales ratio of 26.6 at the end of 2025.

Of course, SoundHound trades at a premium to the U.S. technology sector’s average sales multiple of 7.3, but the potential jump in its growth rate next year justifies that valuation. If the company achieves $400 million in revenue in 2027 and maintains its sales multiple of 14.4 by year-end, its market cap could reach $5.8 billion.

That’s just over double SoundHound’s current market cap, which is why investors looking to invest $1,000 into a top AI stock should take a closer look at this name before it starts surging once again.