Artificial intelligence (AI) stocks have been some of the most volatile on the market over the past year, and SoundHound AI (SOUN) is no exception. The voice artificial intelligence specialist has become one of the most heavily shorted technology stocks on Wall Street, with 134.9 million shares shorted, accounting for about 35.6% of its float. Such unusually high short interest suggests a large portion of investors are betting the stock will decline. But it also sets the stage for a potential short squeeze if sentiment suddenly shifts.
Data show bearish bets on SOUN have climbed steadily in recent months, reflecting doubts about the company’s profitability and competitive pressures in the voice AI market. While the voice AI specialist’s revenue is growing rapidly, it’s still heavily in the red.
Competition is another factor fueling bearish sentiment. SoundHound operates in the highly competitive voice AI market and faces strong rivals, including tech giants Amazon (AMZN) and Alphabet (GOOG) (GOOGL), which have greater resources and mature ecosystems.
However, if positive catalysts such as a major partnership or accelerated adoption of conversational AI platforms force short sellers to cover their positions, the resulting buying pressure could trigger a sharp rally. With short interest among the highest in the Technology sector, SoundHound could be the next candidate to see a significant short squeeze.
Headquartered in Santa Clara, California, SoundHound is a speech and conversational artificial intelligence company that develops speech recognition, natural language processing and voice commerce platforms for industries including automotive, restaurants, customer service and smart devices. Its market capitalization is approximately $3.4 billion.
SoundHound’s stock price has experienced wild swings over the past year, reflecting strong investor enthusiasm for artificial intelligence and growing doubts about the company’s path to profitability. Year-to-date (YTD), the stock has fallen 17.1%, signaling a weak start to 2026 as investors turn away from high-beta AI stocks.
Looking more broadly, the stock’s 52-week performance shows more volatility. SoundHound shares hit a 52-week low of approximately $6.52 and a 52-week high of approximately $22.17 in October 2025. The stock has fallen 62.7% from its October high and is currently trading closer to the lower end of that range, closing at $8.27 today. Overall, the stock has lost 18.52% over the past year.
Despite the plunge, the stock still trades at a high valuation compared to industry peers, at 14.82 times expected sales.
SoundHound AI released fourth quarter and full-year 2025 financial results on February 26, exceeding expectations. SoundHound’s revenue for the quarter ended December 31, 2025 was $55.1 million, up 59% year over year, driven by strong enterprise adoption and expanded customer transactions. Additionally, the company reported a net profit of $40.1 million, an increase from the previous year’s loss.
After adjustments, the company is still in the red. SoundHound reported a non-GAAP net loss of approximately $7.3 million, equivalent to a non-GAAP loss per share of approximately $0.02, compared with a non-GAAP loss per share of approximately $0.05 in the fourth quarter of 2024, indicating a significant improvement in underlying earnings performance.
In fiscal 2025, SoundHound achieved record revenue of $168.9 million, a year-on-year increase of 99% and nearly doubling. According to GAAP calculations, the company’s net loss this year was US$14 million, a significant improvement from the net loss of US$350.7 million in 2024.
SoundHound reported 2025 non-GAAP loss per share of $0.13, an improvement from a loss of approximately $0.20 per share in 2024, underscoring the company’s steady progress in narrowing its losses even as it continues to invest heavily in product development and expansion.
Additionally, management provided forward guidance, projecting 2026 revenue in the range of $225 million to $260 million, signaling confidence in continued demand for its agent AI products and broader enterprise deployment.
Analysts predict that losses per share will fall 10.7% year-on-year to about $0.31 in fiscal 2026, and loss per share will increase 19.4% year-on-year to -$0.25 in fiscal 2027.
Recently, HC Wainwright lowered his price target on SoundHound to $20 from $26 while maintaining a “buy” rating, citing near-term valuation pressure on software stocks.
On the other hand, last month, DA Davidson reiterated its “buy” rating and $14 price target following SoundHound’s strong fourth-quarter results.
Wall Street is moderately bullish on SOUN. Overall, SOUN gets a consensus “Moderate Buy” rating. Of the nine analysts covering the stock, six recommend a “Strong Buy,” while the remaining three are on the fence and give the stock a “Hold” rating.
While the average analyst price target of $14.29 suggests upside potential of 72.8%, HC Wainwright’s Street-high price target of $20 suggests the stock could still rise 141.8%.
On the date of publication, Subhasree Kar did not hold (either directly or indirectly) any securities mentioned in this article. All information and data in this article are for reference only. This article was originally published on Barchart.com