SoundHound AI (NASDAQ: SOUND) stocks see big sell-off in Tuesday’s trading. The pleasant artificial intelligence (AI) the company’s stock price fell 8% as of 11:45 a.m. ET and had fallen as much as 11% earlier in the session. Meanwhile, the S&P500 index fell by 0.5%, and the Nasdaq Composite index fell by 1.2%.
SoundHound AI is losing ground today in tandem with an increase in selling pressure for the broader market. Adding to the bearish trading backdrop, the company’s shares are seeing sell-offs due to high investor expectations on potential news from the Consumer Electronics Show (CES).
Nvidia CEO Jensen Huang kicked off this year’s CES trade show last night with a keynote address, and some SoundHound AI investors were hoping the technology leader would mention the conversational AI specialist in his speech. Nvidia has an investment in SoundHound, and even seemingly unrelated news for the AI leader is sometimes enough to enable substantial moves for the smaller company’s stock. Unfortunately, Huang’s keynote address came and went without a mention of SoundHound.
The conversational AI specialist today unveiled its first in-vehicle voice commerce platform, but it seems investors were hoping for more groundbreaking news. The upcoming platform will allow users to order directly from restaurants through their vehicle’s infotainment system. SoundHound will be demonstrating the platform at its CES booth and will be at the show through January 10.
As today’s trading indicates, SoundHound AI stock is prone to volatile moves. With a market capitalization of about $6.8 billion, the company is valued at about 41 times this year’s expected revenue. That’s a highly growth-dependent valuation that sets the stage for downward pressure if positive catalysts fail to materialize or meet expectations, or if the broader market turns bearish.
On the other hand, the stock’s decline early in this year’s CES show probably doesn’t say much about the company’s long-term future. The company has been adding customers and growing revenue at an encouraging pace, and has built a highly scalable platform with a wide variety of use cases yet to be leveraged.
With the latest quarterly update, management increased the average revenue growth target for 2024 to 82%. In fact, the company expects revenue growth to accelerate to more than double by 2025. So while SoundHound AI stock remains a high-risk, high-reward play, the company has seen impressive growth and some big opportunities lie ahead.