Why SoundHound AI stock is plummeting again today

SoundHound AI (Soun -10.59%) The stock is falling during Tuesday’s daily trading session. The company’s stock was down 11.9% as of 1:10 p.m. ET, according to data from S&P Global Market Intelligence.

Artificial intelligence (AI) stocks are gaining bearish momentum following today’s news. advanced micro devices You may need to secure a special export license before selling some processors in China. There’s currently no new business news for SoundHound, but the company is in the midst of a broader decline. With today’s sale, SoundHound stock is now about 33% below its 2024 high.

What does AMD’s news mean for SoundHound stock?

The possibility of AMD becoming nvidia, and other high-performance processor designers may face additional hurdles selling their technology in China, but that probably won’t mean much for SoundHound’s near-term business prospects. The company derives most of its revenue from U.S.-based customers, and it is unlikely that the U.S. or any other Western government will impede software sales in the Chinese market.

On the other hand, heightened tensions between the U.S. and China are likely to make investors more cautious about the market in general and AI stocks in particular. Artificial intelligence has emerged as a new frontier in the technological arms race between competing global powers, and geopolitical dynamics are a key risk factor that AI investors must monitor and analyze.

What’s next for SoundHound AI?

SoundHound recently released its fourth quarter report, which Wall Street found disappointing across the board. The company’s revenue increased 80.5% year-over-year to $17.15 million, but missed the average analyst revenue target by about $600,000. The company’s loss of $0.07 per share was better than Wall Street’s target of a loss of $0.06 per share for the period.

For the current fiscal year, SoundHound expects to record revenue between $63 million and $77 million. At the midpoint of its guidance range, this represents a year-over-year increase of approximately 52.5% compared to the $45.9 million in revenue it posted last year. The company’s sales targets also reflect some contribution from Synq3, which voice-based AI company SoundHound plans to acquire this quarter, but that’s a healthy growth rate.

SoundHound expects to have more than $100 million in revenue by 2025, which suggests annual growth of about 43% based on the midpoint of this year’s target revenue range. Notably, the audio technology specialist’s valuation now appears to be heavily dependent on growth, although the company said it closed last quarter with $661 million in backorders.

Even after today’s withdrawal, SoundHound AI is valued at approximately 22 times this year’s expected sales.