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SoundHound AI, Inc. shares climbed 5.11% to $18.19 on Tuesday following the announcement of a major partnership with Red Lobster to implement AI-powered phone ordering across all restaurant locations. The collaboration represents a significant expansion of SoundHound’s voice AI technology in the restaurant sector, positioning the company to capture a larger share of the growing conversational AI market. The partnership with Red Lobster, described as the world’s largest seafood restaurant company, marks another milestone in SoundHound’s strategy to diversify its customer base and reduce dependency on any single client.
SoundHound Expands Voice AI Through Red Lobster Deal
The partnership enables Red Lobster to deploy SoundHound’s advanced voice AI technology that can handle multiple calls simultaneously, take orders, and answer common customer questions about hours, locations, and menu items. The AI system is trained on Red Lobster’s full menu and integrates directly with the restaurant’s point-of-sale system, reducing workload for in-store staff while ensuring no calls go unanswered during busy periods. This technology allows restaurant employees to focus on in-person customer service rather than managing phone orders.
According to Larry Konecny, COO of Red Lobster, the partnership aims to streamline the takeout process and provide a more convenient, customized experience for guests. The system offers the flexibility for customers to speak with live agents if preferred, maintaining the human touch while leveraging AI efficiency. Ben Bellettini, SVP of Restaurant Sales at SoundHound AI, highlighted the growing demand for voice ordering services and noted that consumers have quickly recognized the benefits of the quick and easy system.
The collaboration is particularly significant given Red Lobster’s scale as a global seafood restaurant chain, providing SoundHound with substantial market exposure. This partnership aligns with SoundHound’s broader strategy to expand its restaurant solutions portfolio, which already powers thousands of locations with voice and conversational AI technology across various industries including retail, financial services, healthcare, automotive, and smart devices.
SOUN Performance Highlights Growth Potential and Risks
The stock has shown impressive long-term performance with a 272.44% one-year return compared to the S&P 500’s 16.84% gain, and a remarkable 492.02% three-year return versus the index’s 80.92% increase. However, the company faces headwinds year-to-date with an 8.39% decline compared to the S&P 500’s 13.60% gain, reflecting broader market skepticism about AI valuations.
The company’s financial metrics reveal both growth potential and current challenges, with a market capitalization of $7.41 billion and enterprise value of $6.83 billion as of September 22, 2025. SoundHound reported Q2 2025 revenue of $42.68 million with earnings of -$11.86 million, reflecting typical growth-stage losses as the company invests heavily in expansion. The stock trades at a high Price/Sales ratio of 51.48, indicating significant growth expectations built into the current valuation.
Recent analyst activity shows mixed sentiment, with HC Wainwright & Co. maintaining a “Buy” rating and $18 price target as of September 17, 2025. The company has successfully diversified its revenue base, with CFO commentary highlighting the transformation from depending on three customers for 70% of revenue to no single customer representing more than 10% of sales, contributing to 151% year-over-year revenue growth in Q1 2025. This diversification strategy appears to be paying dividends as evidenced by the Red Lobster partnership and other recent enterprise deals.
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