SoundHound AI (SOUN) stock is taking a hit today, down 7.3% as of 11 a.m. ET, amid a broader market sell-off. The S&P 500 index is down 0.1%, and the Nasdaq Composite index is down 0.3%. The company's share price has been down as much as 11% earlier in the day's trading. The decline in SoundHound AI's stock can be attributed to several factors, including the latest U.S. jobs report, rising treasury yields, and a sell-off in the tech sector.



The latest jobs report showed that more jobs were added last month than expected, which is a bearish development because it makes it less likely that the Federal Reserve will cut interest rates. This news negatively impacted growth-dependent stocks like SoundHound AI. Additionally, investors received a decidedly bearish indicator as the yield on 10-year U.S. Treasury bonds rose to its highest level in more than a year. While adding new jobs can be considered a good thing in some respects, the development doesn't exist in a vacuum. Progress has been made on combatting inflation, but there are still concerns that the economy is running hot and upward pricing pressures could return and destabilize markets.

SoundHound AI's stock is also getting hit hard as investors consider rising competitive pressures. Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free » SoundHound AI has positioned itself as an early leader in the conversational AI space, and it's been posting strong sales momentum as demand in the category has ramped. With its last quarterly update, the company raised its full-year sales guidance for 2024 -- and its midpoint target called for growth of roughly 82%. Even more impressive, the software specialist's midpoint target for 2025 suggests that sales will more than double this year -- marking a significant acceleration over last year's already-impressive growth.



However, SoundHound AI still has a highly growth-dependent valuation and is trading at roughly 32 times this year's expected sales even after a significant pullback for its stock. With that in mind, the company's share price could see significant volatility if macroeconomic conditions continue to move in bearish directions or if earnings reports arrive with softer-than-anticipated results.



SoundHound AI's stock has been predisposed to volatile moves, with a beta of 2.83, so its price volatility has been higher than the market average. The company's share price has increased by +654.77% in the last 52 weeks, but today's decline highlights the risks associated with investing in high-growth, high-volatility stocks.

In conclusion, SoundHound AI's stock is taking a hit today due to a combination of factors, including the latest U.S. jobs report, rising treasury yields, and a sell-off in the tech sector. Investors should be aware of the company's growth-dependent valuation and the potential for significant volatility in its share price. While SoundHound AI has shown strong growth and innovation, investors should closely monitor the company's performance and market developments to make informed decisions about their investments.