SoundHound AI's 11.57% Plunge Triggers $750M Trade Volume Ranking 165th Amid Earnings Jitters and Sector-Wide Woes

Market Snapshot

On November 4, 2025, SoundHound AI (SOUN) experienced a significant decline, with its stock dropping 11.57% to close the day. The company’s trading volume reached $0.75 billion, ranking it 165th in market activity for the day. This sharp decline occurred amid broader market volatility, including a 1.5% drop in the Nasdaq-100 index. The sell-off was attributed to profit-taking following recent gains and heightened caution ahead of the company’s third-quarter earnings report scheduled for November 6. Despite a record-breaking $42.7 million revenue in Q2 2025, SoundHound’s shares remain under pressure due to persistent concerns about profitability and sector-wide challenges.

Key Drivers

The recent volatility in SoundHound AI’s stock reflects a complex interplay of near-term earnings expectations, macroeconomic uncertainties, and structural challenges in its business model.

Earnings Anticipation and Mixed Sentiment

SoundHound AI is poised to report Q3 2025 results after market close on November 6, with analysts expecting a loss of $0.06 per share on $40.33 million in revenue. The company has historically exceeded revenue estimates, such as the $42.7 million it reported in Q2 2025, which exceeded expectations and led to a 54% stock surge. However, these gains have been tempered by ongoing profitability concerns. For instance, the company reported a GAAP loss of $0.19 per share in Q2 2025, highlighting its reliance on non-GAAP metrics to mask underlying cash flow challenges. Investors remain cautious, as the stock’s valuation—trading 37.1% below its 52-week high—suggests skepticism about its ability to sustain growth without meaningful margin expansion.

Strategic Growth vs. Operational Constraints

SoundHound’s long-term prospects hinge on its transformation into a voice-first AI company, with Houndify driving revenue through automotive, restaurant, and finance clients. The agentic AI market is projected to grow at a 44.6% CAGR through 2032, offering a tailwind for SoundHound’s Houndify platform. Additionally, the company’s data collection advantages, including a decade of user interactions, could enhance its Polaris AI model. However, these positives are offset by operational hurdles. The company’s cash burn remains significant, with $24.7 million in negative operating cash flows in Q2 2025. Stock-based compensation and dilution—exacerbated by $260.8 million in share sales over the past four quarters—have also raised eyebrows among analysts.

Macroeconomic and Sector Headwinds

Broader market dynamics have amplified SoundHound’s stock volatility. The recent sell-off coincided with a broader tech-sector downturn, including a 6% drop in Texas Instruments’ shares after weak earnings and a 9% decline in Netflix’s stock following missed targets. Additionally, trade tensions—specifically U.S. considerations for new Chinese export restrictions—have created a nervous tone in the market. These factors have spilled over into AI stocks, as investors reprice risk amid uncertainty about global demand for AI infrastructure. SoundHound’s shares, already down 24.4% year-to-date, have been particularly sensitive to these macro trends, given its high valuation relative to peers and lack of profitability.

Analyst Divergence and Investor Behavior

While some analysts remain bullish, maintaining “Buy” or “Outperform” ratings, others advocate caution. For example, Wedbush and DA Davidson have reiterated positive outlooks, citing SoundHound’s revenue momentum and strategic partnerships. Conversely, critics highlight the company’s reliance on lumpy, low-margin deals and its inability to achieve sustainable profitability. This divergence reflects the broader debate about SoundHound’s valuation: Is it a speculative play on AI growth, or a fundamentally flawed business model? The stock’s recent 11.57% drop suggests that investors are increasingly leaning toward the latter, particularly as the November 6 earnings report approaches.

Path Forward

SoundHound AI’s next steps will be critical in determining whether it can regain investor confidence. A strong Q3 report—showcasing both revenue growth and improved cost management—could reignite optimism. However, if the company fails to demonstrate progress on profitability or faces further sector-wide headwinds, the stock may remain under pressure. For now, the balance of risks and opportunities appears tilted toward caution, with analysts advising a “hold” rather than an aggressive buy.