Nvidia Just Gave SoundHound Stock a Big Lift. Should You Buy SOUN Shares Here?

Core Viewpoint - SoundHound (SOUN) shares experienced a rally of up to 12% following comments from Nvidia CEO Jensen Huang addressing AI bubble concerns, indicating potential for continued upward momentum due to the stock's current oversold status [1]. Financial Performance - In Q3, SoundHound reported a 68% year-over-year revenue increase to $42 million, although this was a slight decline from $42.7 million in the previous quarter [3]. - The quarterly revenue growth rate of 68% is significantly slower compared to the 217% growth reported in Q2, highlighting challenges in commercialization efforts [4]. Profitability and Cash Position - The company recorded a GAAP loss of $109 million in Q3 and ended the period with $269 million in cash reserves, indicating deteriorating profitability metrics and increasing cash burn [5]. - There is pressure on SoundHound to achieve profitability soon to avoid diluting existing shareholders through new capital raises [5]. Market Valuation - SoundHound is currently trading at a sales multiple of 55x, which is significantly higher than Nvidia's multiple of 34x, suggesting a potentially overvalued position in the market [6]. Analyst Sentiment - Despite the financial challenges and risks, Wall Street analysts maintain a bullish outlook on SoundHound stock at current levels [8].