SoundHound AI Inc

Five9 offers a more compelling growth opportunity than SoundHound AI in the customer AI market, according to a Zacks Investment Research analysis. SoundHound's first-quarter 2026 revenue rose 52% year over year, with its core Automotive and IoT AI business up 88% excluding acquisitions, and its pending LivePerson acquisition is expected to create a long-term revenue opportunity of roughly $500 million. Five9's first-quarter 2026 revenue increased 9% to $305 million, while adjusted EBITDA rose 41% and free cash flow climbed 42%, supported by a new $200 million share repurchase authorization. SoundHound trades at 10.49 times forward sales, well above the sector average of 6.18 times, while Five9 trades at just 1.33 times forward sales despite generating positive earnings and cash flows. Five9 shares have gained 15.3% year to date, outperforming SoundHound's 38.2% decline, and analysts expect Five9's 2026 earnings of $3.26 per share to grow 10.1%, while SoundHound is projected to post a loss of 15 cents per share.

SoundHound AI shares have fallen 35% so far in 2026, and the company is set to report its latest quarterly results next week. The stock dropped sharply after both of its previous earnings reports this year, even after posting 52% revenue growth in the first quarter. Its adjusted loss widened to $26.6 million last quarter from $22.3 million a year earlier, while gross margins declined to 31.1% from 35.5%. Acquisitions have boosted revenue but also added risk and cost, making organic performance harder to assess. The stock remains above its 52-week low of $5.83, but the article argues there is no guarantee it has bottomed and advises against buying before the report.

Acuity Brands is highlighted as a promising small-cap stock with a market cap of $10.12 billion, while ZoomInfo and SoundHound AI are flagged as underwhelming. Acuity Brands has achieved 9.8% annual sales growth over the last two years, a best-in-class gross margin of 45.7%, and an 8.6 percentage point increase in free cash flow margin over five years. In contrast, ZoomInfo faces an estimated 5.9% sales decline and a projected 3.9 percentage point drop in free cash flow margin, while SoundHound AI struggles with a 40.6% gross margin and a cash-burning history. Acuity Brands trades at $339.85 per share, or 15.7 times forward price-to-earnings.

SoundHound AI reported first-quarter 2026 revenue of $44.2 million, a 52% year-over-year increase, and reaffirmed full-year revenue guidance of $225 million to $260 million. Core automotive and IoT AI revenues, excluding acquisitions, rose 88% year over year. However, the company posted a GAAP net loss of $25 million and an adjusted EBITDA loss of $26.7 million, with net cash used in operating activities widening to $26.3 million from $19.2 million a year earlier. GAAP gross margin declined to 31.1% from 36.5%. SoundHound ended the quarter with $215.6 million in cash and no debt, providing a liquidity cushion as it pursues growth.

SoundHound AI stock has delivered a 42.8% gain over the past three years, yet current valuation checks flag it as expensive. The company trades on a price-to-sales ratio of about 15.2 times, compared with a software industry average of roughly 3.3 times and a peer group average near 4.3 times. A tailored fair price-to-sales ratio for SoundHound AI is 3.3 times, which already factors in its growth profile, margins, size and risk, and the model penalises ongoing losses, cash burn and execution risks. The gap between the trading multiple and the tailored fair ratio signals that the stock is overvalued rather than a bargain, raising the question of whether the current share price of US$6.47 already reflects growth ambitions or leaves enough valuation upside to compensate for the risks.

Automation software stocks tracked by this publication fell an average of 19.1% since their latest earnings results, even as the group's revenues beat analysts' consensus estimates by 1.5% and next-quarter revenue guidance was in line. UiPath reported revenues of $418.4 million, up 17.3% year on year and exceeding expectations by 5.2%, but its full-year revenue guidance only slightly topped estimates and it significantly missed billings estimates, sending its stock down 14%. SoundHound AI posted the fastest revenue growth among peers at 51.7% year on year to $44.2 million, beating estimates by 3.4%, yet its stock dropped 35.6%. Pegasystems recorded the weakest performance with revenues of $430 million, down 9.6% year on year and missing estimates by 7.3%, leading to a 25.8% stock decline. ServiceNow's revenues rose 22.1% year on year to $3.77 billion, beating estimates by 0.6%, but its stock fell 12.8%. Microsoft's revenues grew 18.3% year on year to $82.89 billion, topping estimates by 1.7%, and its stock declined 16.3%.

SoundHound AI Chief Operating Officer Michael Zagorsek sold 64,994 shares for approximately $485,000 on June 15, according to an SEC filing. The sale represented 3.8% of his direct holdings, leaving him with 1,669,497 shares worth about $12.2 million based on the June 15 closing price. The transaction is part of a pattern of sales by Zagorsek, who has made seven sales since December 2024, and follows similar dispositions by other senior executives including the CEO, CTO, CPO, and chief science officer, none of which were executed under 10b5-1 trading plans. SoundHound AI shares have lost 30.7% over the past year, underperforming the Russell 2000's 44.2% return, while the company reported a first-quarter GAAP loss of $25 million.

Shares of Twilio, Atlassian, and SoundHound AI declined in afternoon trading as investors rotated out of high-multiple growth stocks that had led the recent rally. Twilio fell 4.1%, Atlassian dropped 4.5%, and SoundHound AI lost 5%. The sell-off was driven by a sharper-than-expected May import price report showing a 1.9% monthly rise versus a 1.1% forecast and a 6.7% annual gain, the largest since August 2022, which complicated the view that the Iran peace deal had resolved inflation concerns. Additional pressure came from a Bank of America fund manager survey in which 28% of respondents cited an AI bubble as the second-largest tail risk, and from SpaceX's announcement that it is acquiring AI coding platform Cursor for $60 billion, signaling consolidation of valuable AI software assets. Investors also positioned cautiously ahead of new Federal Reserve Chairman Kevin Warsh's first meeting later in the week.