SoundHound is transforming into an agentic AI company.
Its voice-first approach could be a big differentiator for the business.
If it can turn to EBITDA profitability next year, that could be a big driver for the stock.
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When we look at artificial intelligence (AI) stocks that have had rough years, SoundHound AI(NASDAQ:SOUN) is one of the most intriguing that could be poised for a comeback in 2026. The stock is down more than 50% from its 52-week high and nearly 40% on the year.
SoundHound first attracted attention after Nvidia revealed that it had taken a stake in the voice AI company in Q4 2023. The chip giant subsequently sold itself for big gains in Q4 2024, sending shares tumbling when this fact was revealed earlier this year.
However, SoundHound is already on a much different path since Nvidia owned it, which could set it up for a strong comeback in 2026.
SoundHound is still a very young company, but already has a history of adapting quickly to an ever-changing technology landscape. The company actually started as a music recognition app, but has leveraged its work in this technology to create a voice AI platform.
Its voice technology goes beyond simply transcribing what someone says or responding with a predefined number of responses. Instead, they try to interact with people more naturally, understanding intent before someone finishes speaking, just like humans. It is able to do this through the patented “speech-to-sense” and “deep meaning understanding” technology it has developed.
The company gained early traction in the automotive space as automakers began looking for better voice assistants for their cars. The SoundHound platform has made it easier for car owners to interact with their vehicles. With just voice commands, they could get directions or find a nearby restaurant with specific criteria. It was also able to provide drivers with real-time help from their car manuals.
SoundHound has also gained a foothold in the restaurant industry. Here, he was able to take orders over the phone as well as at kiosks and drive-thrus. It even had solutions that could help employees with tasks through headphones if they needed assistance.
Image source: Getty Images.
However, SoundHound looked to transform again when it acquired Amelia last year. Amelia was a provider of virtual agents in regulated industries such as healthcare and financial services, which had compliance considerations and industry-specific jargon. Amelia’s technology was strong in conversational intelligence, such as identifying context and emotion, but lacked SoundHound’s speed and accuracy with natural language processing.
SoundHound combined Amelia’s technology with its own to improve not only its voice platform, but also to be the foundation of its pivot to voice-powered AI agents. Instead of just looking to provide AI voice assistants, they are trying to provide AI agents that can act as virtual employees. This is a huge leap forward and where the market is headed. SoundHound has already begun moving its largest customers to its new Amelia 7 platform, which uses AI agents to handle complex interactions with customers and employees.
As the world moves beyond generative AI and towards AI agents, this could become the next big market. While many companies are working on artificial intelligence agents, SoundHound differentiates itself with its approach to voice. This could be a big advantage because if AI agents are going to go out and perform tasks, they better understand what a person is saying and their intent.
SoundHound has already grown its revenue rapidly this year. Its revenues more than doubled in the first nine months and increased by 68% in the last quarter. Perhaps even more important for investors, however, is that the company is approaching earnings before interest, taxes, depreciation and amortization (EBITDA). It said that if it hits the upper end of its revenue target, it should be EBITDA profitable in Q4.
Considering it’s only at the beginning of its journey as an AI agent, SoundHound has a long growth path ahead of it. If the company can turn to EBITDA profitability next year, continue to improve its gross margins, and continue to grow revenue at a rapid pace, the stock should rebound strongly in 2026.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Down 50%, This Growth Stock Could Be Set for a 2026 Recovery was originally published by The Motley Fool
