An easy way for a company to grow and expand its market share is to acquire other businesses. And many companies rely on this serviceElgar & Acquisition (M&A) as the core of our long-term growth strategy. However, achieving this is not always easy and requires additional employees and costs along the way.
Soundhound AI (Thorn +0.95%) is an example of a company that relies heavily on M&A. The company is a small player in the voice artificial intelligence (AI) market, but has acquired several companies in recent years. Over time, it grew much larger. The company’s CEO believes there is a solution when it comes to M&A. But is this really the case? After all, despite the company’s impressive growth, its stock price has fallen more than 20% over the past year. Let’s take a look at the numbers to see if M&A is working well for SoundHound AI.
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SoundHound’s CEO believes the company has a winning formula
Effectively and efficiently integrating acquired businesses may be difficult. For consolidation to be effective, synergies are needed, and the process includes the unpleasant part of eliminating redundancies and employees. It can be a costly and time-consuming process. But on SoundHound’s recent earnings call, CEO Keyvan Mohajer said he believes the company has found a solution when it comes to taking on struggling businesses and helping them grow.
We currently have a proven track record in M&A. This is a repeatable formula for turning pre-merger decline into post-merger growth by taking complementary business models and technology stacks and integrating them with SoundHound AI, Inc.’s unique ones, emerging together as a powerful force in conversational and agentic AI.
Recently announced SoundHound acquisition plan live person, A company working on conversational AI. The company has acquired several companies in recent years to increase sales, including Amelia, which has helped significantly diversify and expand its customer base.
In 2023, the company’s revenue totaled just under $46 million, and is still around that level, but on a quarterly basis. In the first three months of 2026, SoundHound’s revenue exceeded $44 million. It’s impressive how far SoundHound has come, as acquisitions clearly helped.
But where technology companies fall short is on the bottom line. Operating expenses for the quarter totaled more than $106 million, excluding changes in the fair value of contingent acquisitions. This is more than double the top line. And that’s worse than a year ago, when it would have recorded operating expenses of about $77 million, excluding changes in fair value. While the acquisitions have helped SoundHound grow, it hasn’t made it a more financially sound company to invest in.
Today’s changes
(0.95%) $0.07
current price
$7.46
Key data points
Market capitalization
$3.2 billion
daily range
$7.32 – $7.50
52 week range
$5.83 – $22.17
volume
109.4K
average volume
27.9 million
gross profit
31.27%
Investors remain unconvinced by SoundHound’s strategy, and that’s no surprise.
Despite all the excitement around AI lately, SoundHound’s stock price isn’t rising. And a big part of the reason is probably that investors aren’t convinced by the company’s strategy. While M&A can help increase revenue, additional costs can also weigh on revenue. This is what happened with SoundHound.
This is why, despite the CEO’s positive statements, SoundHound probably doesn’t show that it has a winning strategy when it comes to AI when all the numbers are considered. Investors will need to continue to treat the stock with caution, as cash burn remains an issue and continued stock sales and dilution are unavoidable risks with this investment.
