Is Now the Time to Buy High-Volatility AI Stocks Like MongoDB, AppLovin, and SoundHound AI?

The question of whether to invest in high-volatility AI stocks has never been more pressing. As artificial intelligence reshapes industries, companies like MongoDB, AppLovin, and SoundHound AI have emerged as both beneficiaries and bellwethers of this transformation. Yet their recent financial performances and stock price movements reveal a complex interplay of promise and peril. This analysis examines their risk profiles, valuations, and long-term growth potential, drawing on their third-quarter 2025 results and broader market dynamics.

SoundHound AI: A Tale of Explosive Growth and Lingering Doubts

SoundHound AI's third-quarter 2025 revenue of $42 million, a 68% year-over-year increase, underscores its rapid expansion into AI-driven enterprise solutions according to its latest report. The company raised its full-year revenue outlook to $165–$180 million, reflecting strong demand in sectors like automotive, healthcare, and IoT. However, its GAAP net loss of $109.3 million-largely due to a $66 million non-cash contingent liability-highlights the challenges of scaling a high-growth business. While non-GAAP metrics show a more manageable $13.0 million net loss, the company's cash burn of $24.7 million in operating activities and reliance on equity financing raise concerns about unit economics.

SoundHound's $269 million cash position with no debt offers flexibility, but its stock has faced volatility, dropping despite strong revenue growth as investors scrutinize its path to profitability. For now, the company remains a high-risk bet: its AI ambitions could pay off, but the absence of a clear margin expansion strategy makes it a speculative play.

AppLovin: Profitability Meets Market Realism

AppLovin's third-quarter 2025 results appear robust on the surface. Revenue surged 68% to $1.405 billion, net income rose 92% to $836 million, and Adjusted EBITDA hit $1.158 billion-a 79% increase according to its financial results. These figures reflect the company's dominance in mobile advertising and its ability to monetize user engagement. Yet its stock price, which peaked at $745.61 in November 2025, fell below the key $700 support level by late December, signaling a broader market correction.

The decline reflects a shift in investor sentiment from speculative AI hype to a focus on sustainable earnings. AppLovin's guidance for Q4 2025-$1.57–$1.60 billion in revenue and $1.29–$1.32 billion in Adjusted EBITDA-suggests confidence in its business model. However, its $3.2 billion share repurchase authorization, while a positive signal, may not offset the risks of a cooling tech sector. AppLovin's valuation, though still elevated, appears more grounded in profitability than in speculative hype, making it a less volatile but still high-growth option.

MongoDB: Cloud Dominance and Valuation Concerns

MongoDB's third-quarter fiscal 2026 revenue of $628.3 million, a 19% year-over-year increase, was driven by its cloud-based database service. Non-GAAP net income of $114.5 million and a median price target of $375.00 from analysts according to market analysis suggest strong operational health. The stock's 25.61% surge in December 2025, closing at $435.85, reflects investor optimism about its cloud leadership and full-year guidance of $2.434–$2.439 billion in revenue according to market reports.

Yet MongoDB's valuation remains a sticking point. With a price-to-sales ratio far exceeding industry averages and competition intensifying from rivals like Amazon and Snowflake, the stock's recent gains may already reflect overly optimistic expectations. While its profitability and product innovation are compelling, the risk of a valuation correction looms, particularly if growth slows or margins compress.

Assessing the AI Investment Landscape

The AI sector's allure lies in its transformative potential, but this comes with inherent volatility. SoundHound AI, AppLovin, and MongoDB each represent different stages of the AI value chain: enterprise AI tools, mobile advertising, and cloud infrastructure. Their recent performances highlight a common theme: growth is accelerating, but profitability remains elusive for many players.

For investors, the key is to balance optimism with caution. SoundHound AI's explosive revenue growth and cash reserves justify a speculative position, but its lack of a clear path to profitability demands a high-risk tolerance. AppLovin's strong earnings and disciplined capital allocation make it a more attractive option for those seeking growth with a margin of safety. MongoDB, meanwhile, offers a compelling mix of innovation and execution but requires careful monitoring of valuation metrics.

Conclusion: A Calculated Bet on AI's Future

The current moment for AI stocks is one of both opportunity and uncertainty. While the sector's long-term potential is undeniable, the recent market correction and divergent financial outcomes among these companies underscore the importance of rigorous due diligence. Investors should prioritize businesses with sustainable unit economics, clear margin expansion strategies, and defensible market positions. For those willing to tolerate volatility, the AI revolution offers a chance to participate in a transformative wave-but only for those who approach it with both vision and vigilance.