SoundHound AI Stock Sees Significant Decline

On Monday, shares of SoundHound AI (SOUN) faced a significant drop, losing 11.2% by 4:30 p.m. ET. At one point during the day, the decline was as steep as 12.9%. This fall in stock price coincided with broader market losses, as the S&P 500 and Nasdaq composite dropped by 1.5% and 3.1%, respectively.

Since the company’s presentation at CES 2025, SoundHound's stock has struggled, decreasing nearly 30% since the event began in early January. The situation worsened today, especially in light of the announcement of the new Chinese AI competitor, DeepSeek.

SoundHound's Presentation Disappoints

CES is a crucial event in the tech industry, drawing significant attention from investors and media alike. SoundHound’s presentation was eagerly anticipated, yet it fell short of expectations. The demonstrated in-car voice "commerce" platform did not impress many observers. Critics pointed out that the platform offered limited value while increasing costs and power consumption. This lackluster response left some investors feeling disappointed.

Concerns Over New Competition

SoundHound's disappointing CES performance made the stock particularly vulnerable to negative news regarding competition. The introduction of DeepSeek, developed by a Chinese firm, has raised concerns among investors. Despite its lack of extensive funding and hardware capabilities, DeepSeek has created an AI model that competes with those from industry leaders such as Amazon and OpenAI. Investors worry that American technology companies could lose demand for their products in light of this emerging competition, reminding them of the risks involved in the ever-evolving landscape of AI. As a result, SoundHound and several other AI stocks faced sharp declines as market sentiment shifted.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

SoundHound, Stock, AI