Why Traders Are Doubling Down on SoundHound Stock After Big Rally

Core Viewpoint - SoundHound AI Inc. is experiencing significant options trading activity, indicating potential bullish sentiment among traders as they anticipate further stock movement following a substantial price increase over the past quarter [3][4]. Group 1: Options Activity - In mid-September, SoundHound AI saw a surge in options trading volume, with 285,314 call options purchased, marking a 106.1% increase over the average volume of 138,428 [3]. - The heightened options activity suggests strong conviction in SoundHound's near-term outlook, as traders continue to engage in the options market after a 90.4% stock price increase over the past quarter [4]. Group 2: Revenue Growth - SoundHound reported revenues of $42.7 million for the quarter, reflecting a remarkable 217% increase compared to the same quarter last year [6]. - The company has diversified its revenue streams by acquiring new enterprise customers across various sectors, including automotive, healthcare, retail, and financial services, which helps mitigate risks from sector-specific downturns [7]. Group 3: Market Position and Valuation - SoundHound AI has a market capitalization of $7.5 billion and operates in the high-growth AI sector, indicating significant potential for future growth as it approaches profitability [10]. - The stock trades at a price-to-book (P/B) ratio of 39.3x, significantly higher than the computer sector's average of 7.4x, reflecting the typical valuation of early-stage companies in hyper-growth mode [11]. Group 4: Institutional Support - Institutional investment has increased, with Geode Capital Management raising its holdings by 8.3% in August 2025, totaling $94.8 million or 2.2% ownership [12]. - Despite the positive institutional backing, the stock's high valuation and recent gains may expose it to profit-taking risks [12]. Group 5: Analyst Ratings - SoundHound AI currently holds a Moderate Buy rating among analysts, but it is not listed among the top recommendations from leading analysts, who suggest other stocks may offer better investment opportunities [14].