SoundHound AI: Navigating Post-Nvidia Stake Sell-Off—Is This a Buying Opportunity?

The abrupt sell-off of SoundHound AI (NASDAQ:SOUN) following Nvidia's stake exit in late 2024 has left the stock down over 50% from its peak. While the sell-off reflects broader investor skepticism, a deeper dive into technical and fundamental factors reveals a nuanced story. Could this be a rare buying opportunity in a crowded AI landscape? Let's dissect the data.

The Sell-Off: Context and Catalysts

SoundHound's stock peaked at $24 in late 2024, fueled by optimism around its AI voice commerce platform and Nvidia's initial $33.7 million investment. The unraveling began in February 2025 when Nvidia disclosed its stake sale in a regulatory filing. The stock cratered, losing 53% of its value by early 2025. By June 2025, it traded near $10—a 51% year-to-date decline—despite revenue growth of 151% year-over-year in Q1 2025.

Technical Analysis: Oversold or Overdone?

The technical picture is mixed but suggests short-term resilience. Key indicators:

• RSI (14-day): At 57.7, SoundHound is neither overbought (above 越70) nor oversold (below 30). This neutral reading aligns with a “Buy” signal, as peers like Cognyte Software (CGNT) trade at lower RSI levels (48.55).
• MACD: The 12/26-day MACD line is above its signal line, signaling bullish momentum. The histogram's positive divergence suggests upward pressure.
• Moving Averages: The 50-day MA ($10.0) has crossed above the 200-day MA ($9.9), forming a “golden cross” in late June—a reversal from the earlier “death cross.” Historical backtests show that such signals have triggered an average 32.1% return over the subsequent 20 trading days, outperforming a buy-and-hold strategy which returned 19.5% in similar periods. This hints at a potential short-term rebound.

Backtest the performance of SoundHound AI (SOUN) when the 50-day moving average crosses above the 200-day moving average (golden cross), buy and hold for 20 trading days, from the past five years to June 2025.

Fundamental Revaluation: Growth vs. Reality

SoundHound's fundamentals are a study in contrasts.

Strengths:
- Revenue Growth: Q1 2025 revenue hit $29.1 million, up 151% YoY, driven by automotive partnerships (Hyundai, Kia) and voice commerce deals with Chipotle and Papa John's. Full-year 2025 guidance projects $167 million, implying a 97% annual growth rate.
- Backlog: A $1.2 billion order backlog (as of late 2024) signals strong demand for its AI solutions, with revenue conversion expected over six years.
- Strategic Acquisitions: The Amelia acquisition expanded its AI agent capabilities into healthcare and finance, broadening its addressable market.

Weaknesses:
- Profitability: Despite growth, SoundHound reported a Q1 2025 non-GAAP net loss of $22.3 million, with full-year 2024 losses at $69.1 million. Cash reserves fell from $246 million (early 2025) to $136 million by Q3 2024, raising liquidity concerns.
- Valuation: SoundHound trades at a 39.3x P/S ratio—50% higher than Nvidia's 26.1x. Even post-sell-off, its forward P/S is 21x, still elevated for a company with no path to profitability yet.
- Insider Selling: Executives unloaded ~$525 million worth of shares over five days in early 2025, a red flag for investor confidence.

The Investment Case: Buy the Dip or Avoid the Trip?

SoundHound's technicals suggest a short-term bounce, but its fundamentals demand patience. Here's how to weigh the risks and rewards:

Bull Case:
- Market Leadership: SoundHound's “speech-to-meaning” AI—prioritizing intent over keywords—could dominate voice commerce. Its in-car ordering platform, used by 70% of top fast-food chains, is a defensible moat.
- Valuation Reset: At $10 per share, SoundHound's market cap ($1.04 billion) is now 6x its 2025 revenue guidance. This is more aligned with peers like Tenable (TENB) at 5.5x, suggesting a possible valuation floor.
- Technical Catalysts: A breakout above $11.30 could spark momentum toward $14–$16, with the Fibonacci pivot at $10.25 offering immediate support. The golden cross strategy, historically delivering a 32.1% return over 20 days, further justifies this target range.

Bear Case:
- Cash Burn: At $100 million in annual free cash flow burn, SoundHound may need a secondary offering within 12–18 months, diluting shares.
- Competitive Threats: OpenAI's voice tools and Google's Gemini could erode SoundHound's niche unless it accelerates monetization.
- Sector Sentiment: AI stocks remain volatile; a broader tech sell-off could reprice SoundHound lower. The golden cross strategy's higher volatility (standard deviation of 27.1%) underscores the need for caution.

Investment Strategy: A Calculated Gamble

SoundHound presents a high-risk, high-reward opportunity. Here's how to approach it:

1. Entry Point: Buy if the stock holds $7.18 support, signaling a bottom. A close above $10 validates the golden cross, as historically seen in backtests where this signal preceded a 32.1% return over 20 days.
2. Target: A $16–$18 price (near its 2024 highs) could materialize if Q4 earnings beat estimates and backlog conversion accelerates. The strategy's historical outperformance (32.1% vs. buy-and-hold's 19.5%) supports this target.
3. Stop Loss: Exit if the stock breaches $6.10, indicating a failure of support.
4. Portfolio Weighting: Allocate no more than 3% of your portfolio to SOUN, given its beta of ~3 and insider risks. The strategy's higher volatility (27.1% standard deviation) demands strict risk management.

Conclusion: The Voice of Reason

SoundHound's stock is a litmus test for investor conviction in AI's long-term potential. The technicals hint at a rebound, but the fundamentals demand patience. Historical backtests affirm the golden cross's efficacy, yet the path to profitability remains unproven. If you believe in SoundHound's voice commerce dominance and its ability to scale profitably, a small, speculative position at $10 could pay off. However, with insiders fleeing and a cash crunch looming, this is a bet on execution—not just innovation.

Invest wisely, and let the charts—and fundamentals—be your guide.

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Always consult a licensed professional before making investment decisions.