SoundHound AI (NASDAQ: SOUN) has been on a rollercoaster ride in recent months, witnessing a staggering 45% decline in the past month alone. The stock had surged significantly throughout 2024 and early 2025 but lost momentum when Nvidia (NASDAQ: NVDA) sold its entire stake in the company. With many analysts previously dubbing SoundHound AI a “Nvidia-backed investment,” the sudden exit shook investor confidence, leading to a sharp selloff.
However, SoundHound AI still holds strong fundamental growth, and its upcoming Q4 earnings report on February 27 could provide a much-needed catalyst for recovery.
SoundHound AI’s Q4 Earnings: Key Expectations
SoundHound AI is set to release its Q4 and full-year 2024 earnings after the market closes on February 27. Analysts are expecting a loss per share of $0.11, marking an 83.3% decline year-over-year. For the full year of 2024, the company is projected to report a loss per share of $0.38, with expectations of a 29% improvement in 2025.
Revenue expectations for Q4 2024 stand at $33.7 million, representing an impressive 96.5% year-over-year growth. The company’s revenue growth is anticipated to accelerate further in Q1 2025, with projections of a 196.2% increase year-over-year.
Previous Earnings Performance and Growth Trends
SoundHound AI surprised investors in Q3 2024 when it reported a loss of $0.06 per share, beating analyst estimates of -$0.08 per share. This positive earnings surprise led to a massive 216% rally in the stock over the following two months. If the company delivers another earnings beat in Q4, a similar recovery rally could be on the horizon.
The company has demonstrated strong revenue growth and diversification in recent quarters:
- Q1 2024: $11.6 million
- Q2 2024: $13.5 million
- Q3 2024: $25.1 million
- Total Revenue (First Three Quarters): $50.2 million
For the full year of 2024, SoundHound AI has guided revenue between $82 million and $85 million. This implies Q4 revenue between $31.8 million and $34.8 million, slightly below current analyst estimates. However, its 2025 guidance projects revenue between $155 million and $175 million, signaling substantial growth ahead. Any updates to this outlook on February 27 could influence investor sentiment and trigger price action in the stock.
Wall Street Sentiment and SOUN Stock Price Targets
Despite the recent selloff, SoundHound AI remains a high-growth AI stock with significant upside potential. However, it trades at a high valuation, with a price-to-sales (P/S) ratio of 43. While this is not uncommon for AI startups, it does indicate high expectations baked into the stock price.
Wall Street analysts remain split on SOUN stock. Currently, it has a “Moderate Buy” rating, with three analysts rating it as a “Strong Buy” and three maintaining a “Hold.” The mean price target of $14.50 suggests a 63% upside from current levels, while the highest target of $26 implies the potential for nearly tripling in value over the next year.
What to Watch for on February 27
With Q4 earnings approaching, investors will closely watch the following key factors:
- Earnings Per Share (EPS) Beat or Miss: A positive surprise could trigger a rally.
- Revenue Growth and Future Guidance: Confirmation of strong revenue trends and an update on 2025 projections could impact investor confidence.
- Customer Diversification: In Q3 2024, SoundHound AI reduced its dependence on its largest customer from 72% to 12% of total revenue. Continued diversification will be critical for long-term stability.
As SoundHound AI prepares to report its earnings, the stock remains at a crucial juncture. If it delivers strong results and maintains its robust growth outlook, it could be poised for another rally. Investors should keep a close eye on February 27 for potential market-moving developments.
