Is purchasing SoundHound Artificial Intelligence stock advisable at present?

SoundHound AI, the voice-enabled technology company, has seen a significant shift in its business landscape, expanding beyond the automotive sector to industries such as restaurants, healthcare, and financial services. This diversification strategy aims to strengthen the company's position in the competitive tech market.

In Q2 of 2025, SoundHound reported a revenue of $42.7 million, marking a 217% increase over the previous year. However, the company's stock has experienced a downturn, with the share price dropping about 35% from its 52-week high of $24.98 in December 2024.

As the company approaches its Q3 earnings report, investors may want to exercise caution before making investment decisions. It could be beneficial to wait for SoundHound to reveal its progress in reducing operating expenses, improving its gross margin, and adjusted EBITDA.

The company's management has set a goal to achieve profitability on an adjusted EBITDA basis by the end of 2025. To achieve this, SoundHound aims to gradually improve gross margins in the midterm by finding cost synergies while integrating its acquired businesses.

SoundHound's total assets in Q2 stood at $579.5 million, with $230.3 million in cash and equivalents. Despite this, the company's Q2 operating loss widened considerably to $78.1 million from a $22 million loss in the prior year. Its Q2 adjusted EBITDA stood at a loss of $14.3 million.

It's worth noting that SoundHound's sales multiple peaked around the end of last year, suggesting its stock was expensive. However, the company's P/S ratio is lower now, although it remains elevated compared to Cerence's.

No single vertical contributes more than 25% of SoundHound's revenue, providing resilience against economic downturns in any one sector. This diversification strategy seems to be paying off, as SoundHound's revenue outlook for 2025 has been raised, with expectations of $160 million to $178 million in sales.

Despite the recent decline in SoundHound's stock price, the Motley Fool Stock Advisor analyst team did not include SoundHound AI in their list of the 10 best stocks for investors to buy now. However, the total average return of Stock Advisor is 1,052%, significantly outperforming the S&P 500.

In other news, Nvidia sold its entire stake in SoundHound, leading to a significant drop in the company's stock price. However, no publicly available information indicates that any company sold the entire stock of SoundHound AI in 2023.

As investors await SoundHound's Q3 earnings report, it may be wise to put the company on the watchlist and wait for the share price to potentially drop before considering an investment. The company's long-term goals and diversification strategy could make it an attractive investment opportunity for those willing to take a calculated risk.