SoundHound AI Stock Took a Hit. Is It Time to Buy the Artificial Intelligence Stock?

On the heels of an explosive rally, SoundHound AI (NASDAQ: SOUN) stock is seeing a big pullback. The audio-tech company reported its fourth-quarter earnings results after the market closed Thursday and posted sales and earnings that fell short of expectations for the period.

SoundHound recorded a loss per share of $0.07 on revenue of $17.15 million in Q4. Meanwhile, the average analyst estimate had called for the business to post a per-share loss of $0.06 on revenue of roughly $17.21 million. by the weekend, the company’s stock had plummeted nearly 19% in the daily trading session.

With the stock rapidly losing ground, is it too late to invest in SoundHound AI? Or is the recent valuation decline a buying opportunity?

Was SoundHound AI’s Q4 report a complete dud?

SoundHound’s revenue grew 80.5% year over year in Q4. Meanwhile, the company posted a gross margin of 77% in the period, up from 71% in the prior-year period. Thanks to improving margins, the business’s loss of $0.07 came in significantly below the per-share loss of $0.15 it posted in the prior-year period.

SoundHound’s Q4 sales performance brought full-year revenue to $45.9 million, up 47% annually. The company’s growth accelerated significantly in the year’s second half, but there are some caveats here. SoundHound’s revenue base is still relatively small, and the timeline for future customer additions and deal expansions is difficult to predict.

SoundHound’s Q4 results weren’t bad by any stretch of the imagination, but the company’s valuation had been pushed up by excitement surrounding AI opportunities. Prior to the recent earnings release, the stock had been priced for perfection — and it’s not surprising to see a significant pullback for SoundHound’s share price, even though sales are expanding at a rapid clip.

Will SoundHound AI stock bounce back?

In addition to the company’s Q4 sales and earnings falling short of Wall Street’s targets, investors may have hoped the company would reveal game-changing…