SoundHound AI, Inc. (NASDAQ: SOUN) has become one of the most actively shorted stocks in the AI sector, with a short float exceeding 38% of its available shares.
The stock has dropped more than 16% since the company released its fiscal first quarter 2026 earnings on May 7, deepening concerns among bearish investors.
Despite the selloff, Wall Street analysts remain broadly optimistic, with 8 out of 10 covering analysts maintaining a Buy rating on the stock.
The 12-month average price target for SOUN reflects more than 67% upside from current trading levels, suggesting institutional confidence has not collapsed entirely.
During the fiscal first quarter of 2026, SoundHound posted $44.2 million in revenue, a 52% year-over-year increase that topped Wall Street’s consensus estimate of $42.56 million.
Earnings per share came in at negative $0.06, falling short of the negative $0.03 consensus, underscoring the company’s ongoing profitability challenges.
Management highlighted that excluding acquisitions, core automotive and IoT AI revenue surged 88%, pointing to strong organic demand across its key verticals.
Profitability remained a significant concern, as SoundHound recorded a GAAP net loss of $25 million and an adjusted EBITDA loss of $26.7 million during the quarter.
Gross margins were also squeezed by one-time vendor charges, though management characterized these as non-recurring items unlikely to weigh on future periods.
Following the quarter’s close, SoundHound agreed to acquire LivePerson, a deal management believes will create one of the most comprehensive enterprise AI footprints in conversational AI, serving 25 of the Fortune 100.
The combined company is targeting 2027 revenue of at least $350 million to $400 million, with management identifying a $500 million revenue opportunity tied to the expanded enterprise platform.
SoundHound provides voice and conversational AI technology across automotive, restaurants, smart devices, customer service, healthcare, retail, financial services, and broader enterprise markets.
The company’s rapid revenue growth continues to attract bullish analysts, but persistent losses and elevated short interest signal that the market remains deeply divided on its long-term prospects.
