SoundHound AI (SOUN) stock climbed over 20% on Monday despite no major news from the company. This sharp increase seems to be driven by the significant short squeeze in the stock and likely acted as a key catalyst for the rally. For context, a short squeeze occurs when a heavily shorted stock’s price rises sharply, forcing short sellers to buy back shares to cover their positions, further driving up the price.
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Earlier in March, the company’s CEO, Keyvan Mohajer, had addressed the rising short interest in SOUN stock. Mohajer stated that short sellers don’t change the company’s mission, which is focused on the long term.
Beyond the Short Squeeze
Additionally, the surge in SOUN stock is partly fueled by broader market optimism following a temporary reduction in U.S.-China tariffs. While SoundHound mainly offers software and isn’t directly hit by tariffs, its business still feels the impact. That’s because the AI industry depends heavily on hardware made through U.S.-China trade. When tariffs raise hardware costs, it makes operations more expensive for everyone, including SoundHound.
On top of that, if trade tensions worsen, there’s a risk that SoundHound could be banned in China, which would hurt its partnerships with companies like Tencent (TCEHY).
Is SOUN Stock a Good Investment?
SOUN stock has seen a rocky ride in 2025. After soaring in 2024, the shares have dropped more than 40% year-to-date, erasing a significant portion of last year’s impressive gains. The pullback in the stock highlighted growing investor concerns about its previously high valuation levels.
Meanwhile, SoundHound’s latest Q1 results reflect strong momentum in its voice AI segment. Although revenue surged by an impressive 151% year-over-year, it still came in slightly below analyst expectations. Looking ahead, SoundHound has maintained its 2025 revenue outlook, projecting between $157 million and $177 million. It also reiterated its goal of reaching adjusted EBITDA profitability by year-end, with ongoing revenue growth and recent cost-cutting measures.
Overall, analysts had a mixed response to SoundHound’s results. While some lowered their price targets, others maintained their Hold ratings, reflecting cautious optimism amid ongoing volatility.
What Is the Price Target for SOUN Stock?
According to TipRanks, SOUN stock has received a Moderate Buy consensus rating, with three Buys and three Holds assigned in the last three months. The average SoundHound stock price target is $11.42, suggesting a potential upside of 4% from the current level.
