SoundHound AI, Inc. (SOUNW) stock analysis
Close on Oct 30, 2026Market cap $1.87BP/E –Yield –
StockData Score
Prices as of Oct 30, 2026How the score works
Mixed12 of 30 checks passed
SoundHound AI passes 12 of the 30 checks behind our score; 12 could not be run for lack of data and count as not passed. Each dot in the shape is one check — hover it for the numbers.
- Valuation
- 2/6
- Growth
- 4/6
- Past performance
- 1/6
- Financial health
- 5/6
- Dividend
- 0/6
What stands out
Margin of safety over 20%
The price is 26.9% below fair value, more than the 20% cushion we look for.
Trading below fair value
The share price of $4.22 is below our fair value estimate of $5.77.
No debt
SoundHound AI has no borrowings on its latest balance sheet.
Revenue growing 10%+ a year
Revenue grew 75.7% a year over the last three fiscal years.
What to watch
Return on capital under 10%
Return on invested capital was -52.8%, below the 10% that usually covers the cost of capital.
Interest not well covered
Operating income covers interest expense -350.0 times; we look for at least 5.
P/B above the industry
SoundHound AI's price-to-book of 3.82 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.29.
Return on equity below the industry
SoundHound AI's return on equity of -32.2% is below the Computer Programming, Data Processing, and Other Computer Related Services median of -0.3%.
Valuation2/6
P/E against its history
Not enough price and earnings history to compare.
P/E against the industry
Needs positive earnings and enough profitable companies in the industry.
EV/EBITDA against its history
Needs positive EBITDA and price history.
P/B above the industry
SoundHound AI's price-to-book of 3.82 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.29.
Trading below fair value
The share price of $4.22 is below our fair value estimate of $5.77.
Margin of safety over 20%
The price is 26.9% below fair value, more than the 20% cushion we look for.
Growth4/6
Revenue growing 10%+ a year
Revenue grew 75.7% a year over the last three fiscal years.
EPS growth over 3 years
Needs positive EPS three years ago and today.
Earnings acceleration
Needs positive net income now, a year ago and five years ago.
Growing faster than the industry
Revenue grew 54.6% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 10.8%.
Guidance raised
SoundHound AI raised its full year 2026 revenue outlook outlook on Aug 5, 2026.
Gross margin improving
Gross margin was 42.3% over the last twelve months, against 40.5% a year earlier.
Past performance1/6
Return on equity
Needs positive equity and five years of results.
Return on capital under 10%
Return on invested capital was -52.8%, below the 10% that usually covers the cost of capital.
Return on equity below the industry
SoundHound AI's return on equity of -32.2% is below the Computer Programming, Data Processing, and Other Computer Related Services median of -0.3%.
Earnings over 5 years
Needs positive net income five years ago and in the latest year.
Net margin above its 5-year average
Net margin was -67.5% over the last twelve months, against a 5-year average of -273%.
Net margin below the industry
SoundHound AI's net margin of -67.5% is below the Computer Programming, Data Processing, and Other Computer Related Services median of -4.9%.
Financial health5/6
No debt
SoundHound AI has no borrowings on its latest balance sheet.
Debt not rising
With no debt today, leverage cannot have risen.
Debt covered by cash flow
There is no debt to cover.
Interest not well covered
Operating income covers interest expense -350.0 times; we look for at least 5.
Short-term assets cover short-term debts
Current assets are 3.91 times current liabilities.
Low bankruptcy risk
The Altman Z-score is 4.17; above 3 is the safe zone and below 1.8 the distress zone.
Dividend0/6
No dividend
SoundHound AI has not paid a dividend in the last twelve months.
Yield against Treasuries
No dividend.
Yield against the market
No dividend.
Dividend stability
No dividend.
Earnings cover
No dividend.
Cash-flow cover
No dividend.
Fair value
How we estimate itOur estimate per share
$5.77
The share price is 27% below this estimate.
| Method | Multiple used | Own 5Y median | Industry median | Value per share | Weight |
|---|---|---|---|---|---|
| P/B | 6.2× | 10.4× | 3.3× | $6.82 | 50% |
| P/S | 10.3× | 21.2× | 2.9× | $4.72 | 50% |
| Fair value | $5.77 | 100% | |||
Valuation over time
Using the earnings and balance sheet published at each date, not today's.
- P/B at month end
- Own 5-year median 10.4
- Computer Programming, Data Processing, and Other Computer Related Services median 3.3
An estimate from reported numbers and market multiples, not a price target or investment advice. It can be far off for companies whose profits are about to change sharply.
Market risk
From the past year of daily prices.
Liquidity
Low risk
- Average value traded per day
- $78.73M
- Value traded per 1% price move
- $42.19M
Downside
High risk
- Typical loss in a bad month
- 32.8%
- Volatility (annualized)
- 69%
- Sharpe ratio, 1 year
- -1.18
- Beta to the S&P 500 (5Y)
- 2.67
Typical bad-month loss, week by week
Margins
Share of revenue, fiscal years 2020 to 2025
Gross margin
Operating margin
Net margin
Growth rates
Compound annual growth to fiscal 2025
| Per year | 1 year | 3 years | 5 years | 10 years | Five-year pace |
|---|---|---|---|---|---|
| Revenue | +99.4% | +75.7% | – | – | |
| Gross profit | +72.9% | +49.2% | – | – |
Returns and balance sheet
6 fiscal years. Hover a measure to see how it is calculated.
| Measure | FY2020 | FY2020 | FY2025 | Trend |
|---|---|---|---|---|
| Return on equity | – | – | -4.3% | |
| Return on assets | – | – | -2.3% | |
| Current ratio | – | – | 4.59 | |
| Debt to equity | – | – | – | |
| Net debt to EBITDA | – | – | – | |
| Interest coverage | – | – | -34.7× | |
| Capex to revenue | – | – | 0.5% | |
| Diluted shares | – | – | 409M |
Where the cash went
Fiscal 2021 to 2025, five years combined
SoundHound AI generated $435.56M from operations and spent $3.90M on capital expenditure, dividends and share buybacks. 100% of that went back into the business.
DuPont analysis
Return on equity split into margin, efficiency and leverage
| Fiscal year | Net margin | Asset turnover | Equity multiplier | Return on equity |
|---|---|---|---|---|
| FY2025 | -8.3% | 0.27× | 1.92× | -4.3% |
| FY2024 | -414.1% | 0.24× | 3.34× | -332.7% |
| FY2023 | -193.9% | 0.49× | -22.52× | 2118.3% |
| FY2022 | -374.9% | 0.71× | -0.23× | 61.5% |
Piotroski F-Score
Nine tests of profitability, balance sheet and efficiency, fiscal 2025 against fiscal 2024
- ProfitableNet income above zero-$14.01M
- Cash generatingOperating cash flow above zero-$98.22M
- Return on assets improvedROA up on the prior year-232.1% → -2.5%
- Earnings backed by cashOperating cash flow above net income-$98.22M vs -$14.01M
- Less leverageLong-term debt to assets fell0.0% → –
- Better liquidityCurrent ratio rose3.77 → 4.59
- No dilutionShare count did not rise338M → 409M
- Gross margin improvedGross margin up on the prior year48.86% → 42.36%
- More efficientAsset turnover rose0.56 → 0.30