SoundHound AI Inc (NASDAQ: SOUN) is inching down this morning after a senior Piper Sandler analyst issued a bearish note in its favour.
On Monday, James Fish downgraded the voice AI company to “neutral” and left his price target unchanged at $12 – which hardly represents any meaningful upside on its previous close.
At the time of writing, SoundHound stock is up more than 60% versus its year-to-date low.
Why did Piper Sandler turn dovish on SoundHound stock?
According to the Piper Sandler analyst, the artificial intelligence company may find it increasingly challenging to balance its investments aimed at accelerating growth and its commitment to turning a profit.
SoundHound AI has tapped on acquisitions this year to grow its presence across several verticals, including customer service, quick-service restaurants, and the global automotive sector.
However, James Fish believes the deal momentum will likely slow down in 2026 due to “limited traction” for the company’s customer experience platforms – Amelia.
In his research note, the analyst reiterated that scaling Amelia while keeping up with the laid-out timeline for profitability will prove a tall order for SoundHound in the second half of 2025.
Note that SOUN shares are currently down some 45% versus its year-to-date high.
What SOUN shares need to meet expectations
Piper Sandler analyst James Fish believes SoundHound AI Inc.’s guidance for the full year assumes significant acceleration in the back half of 2025, especially in the company’s automotive business.
However, the broader production-related challenges could stand in the way of SOUN experiencing that expected ramp in the months ahead.
As the artificial intelligence firm continues to invest in growth (including to Scale Amelia), it risks a hit to earnings and shareholder dilution, the analyst told clients.
According to him, the Nasdaq-listed firm needs at least $20 million in incremental revenue in H2 and another $50 million next year to meet expectations.
What’s also worth mentioning is that SoundHound stock does not pay a dividend to incentivize owning it through the aforementioned challenges.
Should you invest in SoundHound AI Inc. today?
Investors are recommended to exercise caution in owning SOUN stock also because it’s currently egregiously overvalued.
At the time of writing, shares of the voice AI firm based out of Santa Clara, CA, are going fora price-to-sales of more than 58, higher than a bunch of top AI stocks, even including Nvidia, which is going for less than 31 only.
Note that other Wall Street firms agree with Piper Sandler on SoundHound shares – echoing that it may indeed be the time now to cut exposure to the artificial intelligence company.
While the consensus rating on SOUN remains at “overweight”, the mean target of $11.83 no longer suggests meaningful further upside in it from current levels.
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