SoundHound AI Shows Signs of Recovery Amid Legal Risks and Earnings Concerns: Analyst Caution Advised

Technical Analysis

SoundHound AI, Inc. (NASDAQ: SOUN) closed at $9.38 on April 24, 2025, up 7.20% from the previous session. The stock traded within a range of $8.78 to $9.61 intraday, showing intra-day volatility but closing near the 50-day moving average of $9.39, suggesting the price is testing a key near-term resistance/support pivot. The RSI at 58 remains in neutral territory, indicating neither overbought nor oversold conditions, but momentum may be building upward. The MACD remains negative (-0.69), signaling that the broader trend still favors bearish momentum; however, a positive price movement with volume slightly below the 35.48 million average suggests tentative buying interest. Immediate support lies at $9.21, with resistance near $10.82. The ATR of 9.27% signifies relatively high price swings, pointing to persistent volatility. For next trading day (April 25, 2025), price movement may consolidate around support before any decisive breakout beyond $10.82 confirms bullish continuation. Over the next week, the stock is poised for a moderate upward test of resistance levels, but with caution warranted given the MACD lagging and legal overhang.

Fundamental Analysis

SoundHound AI’s market cap stands at $3.76 billion, reflecting a mid-cap tech valuation. The trailing twelve months EPS of -$1.04 and a negative P/E of -9.02 denote ongoing unprofitability, common in growth-stage AI and voice recognition firms. Growth prospects hinge on technological development and market adoption, though current financials indicate continued losses. The upcoming earnings announcement on May 8, 2025, represents a critical catalyst that could trigger increased volatility.

The recent emergence of multiple class action lawsuits alleging securities fraud for the period between May 10, 2024, and March 3, 2025, introduces significant legal risk and potential financial liabilities. This cloud undermines investor confidence and may impact stock performance short term.

Consensus analyst price targets cluster at $13.00, approximately 39% above current levels, reflecting optimism regarding future growth or market repositioning once legal issues are resolved. The analyst sentiment breakdown is positive, with four buys and three holds, no sells, yielding a consensus “Buy” call. However, intrinsic valuation remains challenged due to lack of profitability and uncertain cash flow trajectory. The legal developments exacerbate risk, casting doubt on near to mid-term fundamental stability.

Intrinsic Value and Long-Term Potential

SoundHound AI operates in the AI voice intelligence niche, a sector with substantial long-term growth potential driven by increased adoption of conversational AI and voice interfaces. If the company secures market share in commercial and consumer applications, long-term intrinsic value could improve considerably. However, the current negative earnings and elevated volatility diminish immediate intrinsic value, requiring a longer investment horizon for upside realization. The legal disputes present medium-term risk to intrinsic value preservation until resolved.

Investors considering long-term exposure must weigh SoundHound’s innovation potential against execution risks and current legal distractions. Should the company return to profitability and capitalize on growth opportunities, the intrinsic value could justify current multiples and beyond.

Overall Evaluation

SOUN currently manifests characteristics of a volatile growth stock with improving technical signals but lingering bearish momentum. The upside potential is shadowed by legal proceedings that pose meaningful uncertainty. The consensus analyst view favors buying, but fundamentals signal caution due to unprofitability and risk factors.

Classifying SOUN as a Hold candidate aligns best with the current data: the stock shows signs of recovery and technical support near $9.20, while remaining subject to significant legal and earnings event risks. Any upside above $10.82 resistance could upgrade the outlook, whereas failure to hold supports near $9.02–$9.21 may increase downside risk.

In summary, SOUN’s trajectory over the next day and week is cautiously bullish but tempered by legal cloud; the long-term outlook depends on resolving these challenges and achieving operational milestones toward sustainable profitability.