Why Soundhound AI Stock Plunged Today

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Sound Hound AI (the sound -7.52%) Stocks plunged on Monday. The company’s share price fell as much as 7.5 percent, according to data from S&P Global Market Intelligence. The stock witnessed a volatile intra-day session, up 2.1% and down 11.7%. Meanwhile, S&P 500 The index closed about 0.8 percent higher today.

While there was no business-specific news to lower SoundHound stock today, the company’s share price fell in line with volatility for other high-profile artificial intelligence (AI) stocks. In particular, it appears that high expectations for Nvidia And Super Microcomputer The audio tech wound up dragging down the company’s share price.

Soundhound is inspired by stock AI leaders.

This year, Soundhound stock has often seen bullish and bearish prices in line with developments for Nvidia, Supermicro, and other closely monitored AI stocks. On balance, this has been a great thing for audio tech stocks — and the dynamic has helped boost the company’s share price by 288% in 2024 trading. But the interconnected valuation dynamic has also been a source of volatility.

Today, Super Microcomputer stock was added to the S&P 500 index. Despite inclusion in the benchmark index potentially creating a positive long-term valuation catalyst for the server specialist’s stock, the index’s rise appears to have prompted investors to “sell the news” and drive strong share price gains. but causes profit to be made which was already made. saved.

Meanwhile, Nvidia kicked off its annual GPU Technology Conference (GTC} today. It looks like some investors will be betting that Nvidia or SoundHound will have some big new tech to announce earlier in the day. While Nvidia did indeed announce new GPUs when the market closed, the AI ‚Äč‚Äčleader’s share price actually fell about 1% in after-hours trading.

What’s next for Soundhound Stock?

On the heels of an incredible rally, Soundhound has a lot to prove. Despite today’s pullback, the company is valued at about 36.6 times this year’s expected sales.

SOUN PS ratio (forward) data by YCharts

SoundHound expects sales to fall between $63 million and $77 million in 2024, after year-over-year revenue growth of nearly 47 percent to $45.9 million in 2023. If the company had reached the middle of this guidance range, sales would have increased by about 53%. % year over year.

Soundhound looks poised for rapid sales growth, but it remains to be seen if and when the company can transition to reliable profitability and strong earnings growth. On the heels of such explosive stock gains, the stock looks risky — even if excitement for AI and strong sales growth could push shares higher.

Keith Noonan has no position in any stocks. The Motley Fool has positions and recommends Nvidia. The Motley Fool has a Disclosure Policy.

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