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SoundHound’s Bottom Is In—Inflection and 50% Upside Ahead?

Submitted by Thomas Hughes. Originally Published: 5/8/2026.

SoundHound’s (NASDAQ: SOUN) stock price appears to have bottomed earlier this year and may be on track to reverse higher. While persistent issues such as cash burn remain, the company appears to be gaining traction and has a major acquisition ahead.

The LivePerson Acquisition

LivePerson is a conversational cloud AI platform whose business is driven by a messaging platform that enables brands to converse with consumers across channels.

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The benefits of SoundHound's acquisition of LivePerson are substantial, including expanded reach, enhanced services, cost-saving opportunities, technological advancements, and accelerated growth. LivePerson’s portfolio includes hundreds of top-tier global brands, including airlines and financial institutions, which expands SoundHound’s reach and cross-sell opportunities.

If the acquisition closes as expected, the combined company will provide unified voice and digital messaging across the communications ecosystem. The combination is also expected to accelerate and sustain growth, as their pooled data will enhance AI training and improve accuracy.

Path to Profitability

Ultimately, the combination is expected to accelerate sustainable growth while improving the path to profitability. As it stands, the outlook for profits is mixed. Company executives are forecasting an inflection in profits by early 2027, while many analysts don’t expect sustainable profitability until 2028. The takeaway for investors is that ample uncertainty remains, but the risk may be to the upside, given the ultra-low stock price, the recent acquisition of Amelia, and the launch of the firm's OASYS product.

Amelia enables voice-activated, automated customer service and employee-facing interactions, including agentic AI capabilities. It expanded SoundHound’s services beyond simple customer interactions, delivering enterprise-grade agentic capabilities. OASYS is a self-learning, agentic AI platform that enables quick, easy agentic AI development, deployment, and upgrading. Its key feature is its self-learning capability, which allows the system to learn from new data, build AI, and improve agentic operations over time.

Mixed Quarterly Results Send SoundHound Lower

SoundHound had a decent Q1 despite the mixed bottom-line result and the market reaction. The company reported $44.2 million in net revenue, up nearly 52% year-over-year (YOY) and 375 basis points (bps) better than expected. The strength was driven by all verticals and categories, with notable strength in the core business. Automotive and Internet of Things (IoT) grew by nearly 90%, adjusted for acquisitions, underscoring the strength of the business model. New customers are becoming long-term customers, increasing their use of the service.

Margins were a mixed bag, with adjusted gross margin strong at 49.7% and adjusted EBITDA still in the red. However, non-recurring one-offs related to the growth strategy are to blame, and guidance is stronger. The company reaffirmed its revenue target, expecting $242.5 million at the midpoint, above analyst consensus and pointing to robust growth for the remainder of the year.

Cautious Analysts Forecast 50% Upside: Institutions Buy Into the Outlook

The analyst response following the release aligned with recent analyst activity, showing caution amid continued losses but optimism about the future. The 10 analysts tracked by MarketBeat carry a consensus Moderate Buy rating, with a 60% buy-side bias and more than 70% upside at the consensus target. If traction becomes clear in the coming quarters, particularly regarding the LivePerson acquisition and the path to profitability, sentiment will likely improve and provide a stronger catalyst.

Institutions are buying into the outlook despite near-term headwinds. MarketBeat data shows the group owns only 20% of the stock but has been accumulating at a robust, roughly $3-to-$1 pace over the trailing 12 months. Activity was strong in Q1 2026, the trend continued into early Q2, and it will likely remain positive as the year progresses.

The biggest risk is that SoundHound fails to execute its strategy, including the acquisition of LivePerson, in which case downside in the stock could be substantial.

Short Sellers a Risk and Opportunity in SoundHound Stock

Short-sellers are leaning heavily into the SoundHound trade. Activity has ramped over the past two years, driving short interest to approximately 40% of the stock and creating a significant headwind for market action. With this in place, upside in the stock price is limited, but a catalyst for short covering is in the works.

Aside from the LivePerson acquisition, SoundHound is well-positioned to gain traction in the current and upcoming quarters. Add the LivePerson acquisition, and short covering could easily turn into a squeeze. In this scenario, SOUN price action could revert to the analysts’ consensus target, near the midpoint of the long-term trading range.

The technical action is bullish, suggesting that short covering may already be underway. The market is forming a Head & Shoulders pattern, setting up to confirm the second shoulder with the post-release price dip. The likely outcome is that support near $8 is confirmed, and a rebound quickly follows.

The critical resistance point is the pattern's neckline, which indicates a bullish bias. A move above $9.75/$10 may be the technical trigger needed to accelerate short covering.