Why SoundHound AI Stock Plummeted 46% in the First Half of 2025 but Has Been Bouncing Back

Core Viewpoint - SoundHound AI experienced a significant stock valuation decline of 45.9% in the first half of 2025, contrasting with a 5.5% gain in the S&P 500 index during the same period [1][2]. Group 1: Stock Performance and Market Reactions - The valuation pullback was partly a reaction to the strong gains in 2024 and influenced by macroeconomic factors and business-specific catalysts [2][4]. - The stock faced a steep decline after the launch of DeepSeek's R1 model and during the CES expo, where expectations for new product announcements were not met [4][5]. - A significant sell-off occurred following Nvidia's divestment of its stake in SoundHound AI, which had previously supported the company's valuation [6]. Group 2: Financial Performance - In May, the company reported a 151% year-over-year increase in sales, reaching $29.1 million, despite posting a non-GAAP loss of $0.06 per share [7]. - SoundHound AI is guiding for annual sales between $157 million and $177 million, indicating a potential growth of approximately 97% over last year's revenue of $84.7 million [9]. Group 3: Valuation and Market Outlook - The company's current valuation stands at roughly 29 times this year's expected sales, reflecting a growth-dependent valuation model [10]. - In July, the stock saw an uptick of about 8% as investors increased their bets on growth stocks [8].