Why Is Everyone Talking About SoundHound AI Stock?

Lawrence Nga, The Motley Fool

Sat, Jul 5, 2025, 8:03 AM 5 min read

• SoundHound provides an independent AI voice platform to customers across multiple industries.

• It has a total addressable market of $140 billion.

• The company is growing at triple-digit rates.

• 10 stocks we like better than SoundHound AI ›

Artificial intelligence (AI) is one of the most significant trends of our generation, thanks to its transformative effects that will impact almost every aspect of our lives. Think of it as revolutionary as electricity and the internet.

Unsurprisingly, investors have been doubling down on companies well-positioned to leverage this trend, such as Nvidia, Palantir, and Tesla.

But AI will bring opportunities not only to these big tech giants but also to smaller, up-and-coming future tech giants. SoundHound AI (NASDAQ: SOUN) is one of them.

Initially founded in 2005 as a music recognition company, SoundHound has evolved into a broader AI voice platform company with proprietary technology that understands and responds to human speech in real time.

The company's value proposition, though complex to achieve, is relatively straightforward. It provides a voice platform that's embedded directly into products (such as cars) without requiring the use of cloud-based assistants like Alexa, Siri, or Google Assistant. With the help of its software, users can use voice as an interface to interact with smart devices, cars, or other Internet of Things (IoT) devices.

Leveraging its technology in voice recognition and natural language understanding, the company has built a proprietary offering that's independent of consumer tech companies like Microsoft and Alphabet. According to the company, its technology surpasses that of competitors in terms of speed, accuracy, and understanding of complex language. With its technology stack, it allows for the provision of best-in-class service while giving customers complete control over their brand, users, and data.

Additionally, SoundHound has leveraged the latest AI technologies, including generative AI, to develop its voice AI agent. The AI agent can function on smartphones, SMS, kiosks, mobile apps, and web chats, helping customers tackle a wide range of customer service activities across multiple industries. Currently, the company's main customers are automotive and hospitality businesses, quick-service restaurants, and call centers.

In return for providing its voice platform, SoundHound generates revenue primarily through three channels. First, it receives royalties on products -- cars, smart TVs, and IoT devices -- that incorporate its voice platform. Here, customers pay based on volume, usage, per device, or user. Next, it generates software-as-a-service revenue from services such as food ordering and customer service. Here, customers pay on a monthly contract or a usage basis. The last pillar of SoundHound's revenue centers around advertising and commerce, where it earns a commission by enabling sales of customer products and services.