SoundHound AI Shares Drop 3.38% as Nvidia Unwinds Investment, Ranking 213th in U.S. Market Volume

Market Snapshot

SoundHound AI (SOUN) closed October 28, 2025, down 3.38%, marking a significant decline amid a trading volume of $0.56 billion, which ranked the stock 213th in total U.S. equity market activity for the day. While the volume indicates moderate liquidity, the price drop suggests heightened investor caution or profit-taking following recent developments. The stock’s performance contrasts with broader market trends, as its position in the mid-cap or small-cap segments—implied by its "-71" market code—may amplify volatility compared to large-cap benchmarks like the S&P 500.

Key Drivers Behind the Selloff

The recent selloff in SoundHound AI shares appears tied to the broader pattern of speculative trading linked to Nvidia’s investment activity. Earlier in the year, SoundHound experienced a surge in momentum after it was disclosed that Nvidia had invested in the company, a trend mirrored by Serve Robotics. However, subsequent 13F filings revealed that these investment stakes had been liquidated, triggering sharp sell-offs in both stocks. This pattern highlights the sensitivity of smaller AI-focused firms to institutional flows, where short-term inflows from major players can drive rapid gains but also expose them to abrupt reversals when positions are unwound.

The article further contextualizes the market’s reaction by drawing parallels to Nvidia’s recent $1 billion investment in Nokia, which, while smaller in scale, has sparked speculation about the strategic value of 5G and 6G technologies in advancing AI-driven robotics and IoT ecosystems. While SoundHound is not explicitly mentioned in this context, the broader narrative underscores a sector-wide reevaluation of early-stage AI applications. Investors may be recalibrating expectations as the market differentiates between AI-driven software advancements—already commercialized in large language models—and the slower progress in hardware and infrastructure integration.

The sell-off also reflects a broader thematic shift in risk appetite. The article notes that while large language models have matured, real-world AI implementation in robotics and IoT remains in an “earlier growth phase.” This distinction may be dampening investor enthusiasm for companies like SoundHound, whose business model is closely tied to nascent AI applications. The market’s reaction to Nokia’s partnership with Nvidia suggests that investors are prioritizing firms with proven infrastructure capabilities over those with speculative AI concepts, further pressuring smaller players.

Lastly, the volatility in SoundHound’s stock highlights the challenges of trading in high-growth, low-liquidity stocks during periods of macroeconomic uncertainty. The $0.56 billion trading volume, while substantial for a non-blue-chip stock, pales in comparison to the liquidity of major tech names. This dynamic can exacerbate price swings, particularly when institutional investors adjust positions in response to macroeconomic signals or sector-specific news. The recent sell-off may also reflect broader caution ahead of year-end portfolio rebalancing, as investors seek to lock in gains or reduce exposure to speculative assets.

In summary, SoundHound’s 3.38% decline on October 28 reflects a confluence of factors: the unwinding of speculative bets linked to Nvidia’s earlier investments, the sector’s reevaluation of AI’s commercialization timeline, and broader liquidity dynamics in the small-cap space. While the company’s long-term prospects remain tied to advancements in AI-driven technologies, near-term volatility is likely to persist as market participants navigate shifting narratives around AI’s practical applications.