SoundHound AI stock downgraded to Neutral by Piper Sandler

Investing.com - SoundHound AI Inc. (NASDAQ:SOUN), currently trading at $11.57 with a market cap of $4.65 billion, was downgraded from Overweight to Neutral by Piper Sandler on Monday, though the firm maintained its $12.00 price target. According to InvestingPro data, the stock has shown significant volatility, with a beta of 2.79.

The research firm cited concerns about the company’s second-half 2025 outlook, noting that deals might potentially be pushed into 2026 despite the company’s overall thesis remaining intact.

Piper Sandler highlighted the challenge SoundHound faces in trying to achieve profitability while simultaneously investing in its Amelia product line, stating that doing both effectively is difficult and success with Amelia could lead to higher earn-outs and dilution.

The firm expressed concern that potential pressure on second-half estimates could negatively impact SoundHound’s valuation multiple, which currently exceeds 20 times calendar year 2026 estimates, especially considering the stock has risen approximately 30% over recent months.

Despite the downgrade, Piper Sandler maintained a constructive view on SoundHound’s long-term opportunities, acknowledging that successful execution in the second half of 2025 could potentially create a "squeeze" on shares.

In other recent news, SoundHound AI Inc. reported its first-quarter 2025 earnings, showcasing a significant year-over-year revenue growth of 151% to $29.1 million, although it fell short of the $31.37 million forecast. Despite this revenue miss, the company exceeded expectations with an EPS of -$0.06, compared to the anticipated -$0.09. SoundHound AI’s acquisition of Amelia has been pivotal, contributing to 60% of the company’s revenue in the first quarter. H.C. Wainwright adjusted its price target for SoundHound AI to $18, down from $26, maintaining a Buy rating, while Northland and Cantor Fitzgerald have set price targets of $8 and $8.50 respectively, with Neutral ratings. SoundHound AI has also partnered with Allina Health to deploy an AI agent, Alli, to enhance patient engagement and streamline healthcare services. This collaboration underscores SoundHound’s expansion into diverse sectors, including healthcare, automotive, and restaurants, with notable growth in the restaurant sector where over 13,000 locations now use its services. The company holds $246 million in cash, positioning it well for potential mergers and acquisitions.

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