What Happened?
Shares of voice AI technology company SoundHound AI (NASDAQ: SOUN) fell 7.8% in the morning session after investor caution grew ahead of its upcoming third-quarter earnings report, coupled with concerns about profitability.
The pullback reflected profit-taking after recent gains and renewed worries about the company's ability to make money. SoundHound AI was scheduled to report its results on November 6, and market expectations for its bottom line had reportedly widened to a larger loss per share. Adding to the pressure, the stock's valuation was viewed as high compared to others in its industry. A generally nervous tone in the market also appeared to weigh on the stock, which had been experiencing jumpy movements in previous sessions.
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What Is The Market Telling Us
SoundHound AI’s shares are extremely volatile and have had 93 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 7.5% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines.
Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
SoundHound AI is down 24.4% since the beginning of the year, and at $15.25 per share, it is trading 37.1% below its 52-week high of $24.23 from December 2024. Investors who bought $1,000 worth of SoundHound AI’s shares at the IPO in April 2022 would now be looking at an investment worth $2,033.
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