Is SoundHound AI a Speculative Buy Ahead of 2026? Evaluating Agentic AI Growth and Strategic Risks

SoundHound AI (SOUN) has emerged as a high-growth contender in the agentic AI space, with its Q3 2025 results underscoring both its momentum and challenges. The company reported $42.05 million in revenue for the quarter, a 68% year-over-year increase, and raised its full-year 2025 revenue guidance to $165–180 million, reflecting strong demand for its voice and conversational AI solutions. However, with a non-GAAP loss of $0.03 per share in Q3 and no profitability yet achieved, the question remains: Is SOUN a speculative buy ahead of 2026?

Agentic AI Growth and Margin Expansion

SoundHound's financials highlight a compelling narrative of growth and improving efficiency. Its non-GAAP gross margin expanded to 59% in Q3 2025, up from prior quarters, signaling better cost management and scalability.

CFO Nitesh Sharan noted that the company could achieve adjusted EBITDA profitability at the upper end of its 2025 revenue guidance in Q4 and aims for near breakeven in 2026 while maintaining high growth. This trajectory suggests a path to profitability, albeit with significant uncertainty.

The company's focus on agentic AI-systems capable of autonomous decision-making-positions it to capitalize on a market projected to grow to $199 billion by 2034. SoundHound's Amelia 7 platform, which powers voice-driven interactions, has seen adoption in sectors like healthcare, automotive, and quick-service restaurants (QSRs), with Wedbush Securities labeling the firm a "next-stage AI growth" candidate.

Strategic Partnerships and Market Expansion

Strategic partnerships are a cornerstone of SoundHound's growth strategy. Its collaboration with Red Lobster, a QSR chain, to deploy AI-driven order-taking systems has generated investor buzz, though specific financial terms remain undisclosed. The partnership, however, demonstrates the scalability of SoundHound's technology and its ability to penetrate high-margin verticals. Similarly, an expanded deal with Telarus aims to accelerate enterprise adoption across new industries, further diversifying revenue streams.

The Red Lobster deal also underscores SoundHound's competitive differentiation. CEO Keyvan Mohajer claims the company's AI outperforms Google and Amazon by 35%–40% in accuracy and latency while operating at lower costs. This edge, combined with a two-decade head start in proprietary voice models, creates a moat in a market dominated by Big Tech.

Valuation Risks and Competitive Pressures

Despite these positives, SoundHound's valuation remains speculative. At a $1.5 billion market cap (as of November 2025), the stock trades at over 10x its 2025 revenue guidance, a premium to peers like Nuance Communications. While Wedbush maintains an "Outperform" rating and a $18 price target, the firm acknowledges macroeconomic risks and intensifying competition.

Moreover, SoundHound's path to profitability hinges on sustaining its growth rate. Even at the upper end of its 2025 guidance ($180 million), the company would need to nearly double revenue to reach $360 million by 2026-a tall order in a market where enterprise AI adoption is still nascent.

The 2026 Outlook: A Calculated Bet

For investors considering SOUN ahead of 2026, the calculus depends on two factors: (1) the company's ability to monetize its agentic AI leadership and (2) the validation of its $199 billion TAM by 2034. SoundHound's recent cash reserves and improved gross margins provide flexibility, but its reliance on enterprise contracts exposes it to client concentration risks.

The Red Lobster partnership, if expanded to other QSRs, could serve as a catalyst. However, without transparency on contract terms or revenue contribution, it's hard to quantify its impact. Similarly, while Mohajer's claims about outperforming Big Tech are bold, third-party benchmarks or client testimonials would strengthen this narrative.

Conclusion: A High-Risk, High-Reward Proposition

SoundHound AI embodies the classic speculative buy: a disruptive technology with a clear growth trajectory but unproven scalability and profitability. Its Q3 2025 results and strategic moves validate its potential, but the stock's valuation demands a high bar for execution. For risk-tolerant investors who believe in the agentic AI revolution and SoundHound's ability to capture a meaningful share of the $199 billion TAM, SOUN could deliver outsized returns by 2026. However, those wary of overhyped AI plays or macroeconomic headwinds should approach with caution.