a big challenge for Soundhound AI (Thorn +4.22%) may be aligning itself with big tech companies as they look to expand. There is considerable competition in artificial intelligence (AI) and voice AI services provided by SoundHound. And those concerns may be part of the reason why stocks have struggled to rise this year. It will fall by about 10% so far in 2026.
But SoundHound’s management remains confident in its chances, and the company’s CEO believes that unlike big tech companies, there is no need to overspend or waste money on AI. Here’s why:
Image source: Getty Images.
SoundHound’s CEO believes the company won’t be as wasteful as other tech giants
During SoundHound’s latest earnings call, CEO Keyvan Mohajer suggested that the AI company doesn’t intend to overcomplicate the task at hand, so it may not be as lean as hyperscalers or big tech companies.
“Unlike some companies who spend billions of dollars trying not to miss out, we know what we’re doing. We know the recipe for training. We have the data, and our models will be specific to what they’re used for. Importantly, we also believe that the models that handle customer service inquiries don’t need to solve quantum physics problems or answer history questions with haiku.”
SoundHound believes that by taking a narrower approach to its AI strategy, it can keep costs lower and potentially put itself on a stronger trajectory toward profitability. This is important. That’s because, while the business has experienced strong growth in recent quarters, achieving profitability will require efficiency and cutting unnecessary spending. In each of the last four quarters, the company’s operating expenses totaled more than $60 million, exceeding revenue.
Today’s changes
(4.22%) $0.38
current price
$9.38
Key data points
Market capitalization
$3.9 billion
daily range
$8.82 -$9.41
52 week range
$5.83 -$22.17
volume
454.2K
average volume
27.6M
gross profit
31.27%
But the company still has a lot to prove
While management may be confident in its approach, SoundHound’s financials remain underwhelming. Acquisitions have contributed to business growth and diversification, but they have also increased complexity and costs, making it difficult for the company to increase its profitability.
And in the first three months of this year, the company burned through $26.3 million in daily operating activities. This is more than the $19.2 million spent in the same period last year. This is a worrying sign for a company that is still in the midst of early growth and needs to generate strong positive cash flow to show growth investors that it’s on the right path.
However, ultimately it is the financials and numbers that matter most, so investors should take the CEO’s confidence with a certain degree of discount. And until SoundHound’s performance improves and we see significant improvement, this stock will remain a risky buy. Therefore, I will continue to take a wait-and-see attitude.
