Think SoundHound AI Is Expensive? These 3 Charts Might Change Your Mind

SoundHound AI (NASDAQ:SOUN) has faced skepticism over its valuation, with a price-to-sales (P/S) ratio of 38.1x—nearly double that of industry giants like NVIDIA. Critics argue the stock is overpriced given its steep losses and volatile share price. But three key metrics tell a different story: rapid revenue growth, a bulging order backlog, and a fortress-like balance sheet. Here’s why investors might want to reconsider dismissing this AI innovator.

1. Revenue Growth Outpaces Valuation Concerns

SoundHound’s revenue surged 85% year-over-year in 2024 to $84.7 million, with management guiding for a further 97% rise in 2025 to $167 million. At its current valuation, the stock trades at 38.1x 2025 revenue estimates—a high multiple, but not unreasonable given the company’s market position. SoundHound is a leader in conversational AI, with partnerships in high-growth sectors like automotive (LUCID, Stellantis), healthcare (Duke Health), and voice commerce (Burger King UK). Its Q1 2025 revenue grew 101% YoY, outpacing even its own aggressive forecasts. For context, AI software companies like Palantir (PLTR) and Datadog (DDOG) trade at 10x–15x forward revenue, but SoundHound’s 2025 revenue growth rate of 97% dwarfs these peers. High growth often commands a premium, and SoundHound’s trajectory justifies its multiple—if the revenue momentum continues.

2. The $1.2 Billion Backlog: A Guarantee of Future Growth

SoundHound’s order backlog—a metric of signed contracts yet to be delivered—has skyrocketed 75% year-over-year to $1.2 billion as of December 2024. This represents a “banked” revenue pipeline of roughly six years at current burn rates. For perspective, in 2023, the backlog was $685 million, and in 2022, just $400 million. This growth reflects not only expanding client relationships but also new sectors like healthcare and financial services. The backlog’s size reduces execution risk: even if revenue growth slows, the company has ample contracted work to sustain it. In a sector where many AI companies struggle with adoption, SoundHound’s backlog is a rare quantifiable moat.

3. A Cash Fort Worth $198 Million—and No Debt

Despite posting a $350.7 million GAAP net loss in 2024 (due largely to non-cash charges), SoundHound ends 2024 with $198 million in cash and no debt. This liquidity buffer gives the company flexibility to invest in R&D, acquire talent, or weather macroeconomic headwinds. Compare this to peers like UiPath (PATH), which burn cash at a rate of ~$100 million annually, or C3.ai (AI), which relies on equity raises. SoundHound’s cash pile—equivalent to 10 months of operating expenses—provides a safety net while it scales. With its backlog converting to revenue over time, the company could achieve positive cash flow sooner than investors expect.

Risks and Reality Checks

SoundHound is not without risks. Its Q1 2025 non-GAAP net loss of $0.10 per share (narrowing from $0.15 estimates) shows progress but not profitability. Legal challenges, including a class-action lawsuit, could divert resources. And the stock’s 60% drop from its 2023 peak underscores its volatility. However, the company’s strategy of focusing on agentic AI—a subset of AI that enables proactive agents—aligns with a $3.5 trillion market opportunity by 2030. Its recent launches, like its in-car voice commerce platform and healthcare AI solutions, are already bearing fruit.

Conclusion: A High-Risk, High-Reward Play with Data on Its Side

SoundHound AI is far from a sure bet, but its metrics argue against dismissing it as overvalued. A 97% revenue growth rate, a $1.2 billion backlog, and a $198 million cash war chest collectively suggest the stock could be a beneficiary of AI’s next wave. While the P/S ratio is high, it’s matched by high growth and defensible moats. If you’re comfortable with volatility and believe in SoundHound’s execution, these charts make a compelling case to consider it as a long-term play. For conservative investors, however, the risks—legal, operational, and macro—remain significant.

As SoundHound’s CEO Keyvan Mohajer noted in its Q1 earnings call: “We’re building a company for the next decade, not the next quarter.” The data so far suggests the foundation is there—now it’s up to the market to decide whether to pay for it.