SoundHound's Q2 Results Fuel Estimate Hikes: Is the Stock a Buy Now?

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The bullish brokerage view is also notable. Of the eight recommendations making up the current Average Brokerage Recommendation, five are Strong Buy, accounting for 62.5% of the total. The average Wall Street price target implies 62.2% upside from the latest closing price.

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Record Q2 Gives Analysts More Confidence

SoundHound delivered second-quarter revenues of $61.9 million, up 45% year over year and 40% sequentially. The quarter marked the company's highest revenue to date. Non-GAAP loss was 2 cents per share compared with 3 cents a year earlier. GAAP gross margin expanded to 45.1% from 39%, while adjusted EBITDA loss improved 33% to $9.6 million from $14.3 million.

The quarter's strength was broad-based rather than dependent on one market. Management said growth came from healthcare, financial services, technology and automotive, while enterprise AI remained the largest contributor to revenues. SoundHound also continued to expand its automotive presence in Asia.

Strong second-quarter execution prompted management to raise its 2026 revenue outlook to $230-$260 million. The guidance does not yet incorporate the planned LivePerson acquisition, and SoundHound intends to update its outlook when that transaction closes.

OASYS Emerges as a Major Growth Catalyst

OASYS is becoming central to SoundHound's growth story. Management attributed a significant part of the second quarter's stronger-than-expected performance to the self-learning agentic AI platform, which was launched in May. The company said it is seeing strong results across demos, RFPs, pilots and production deployments. One eight-figure commitment moved from initial demonstration to contract signing in less than 90 days, highlighting the potential for OASYS to shorten sales cycles.

The platform also gives SoundHound a way to expand within existing customers. OASYS allows businesses to deploy AI agents across phones, vehicles, restaurants, retail locations and other channels rather than building separate solutions for each channel. A top-20 healthcare provider quadrupled its spending with SoundHound during the second quarter, while the company expanded or renewed relationships with several other healthcare and financial-services customers.

SoundHound's proprietary technology could support margins over time as well. The company is investing in its Polaris speech foundation model, specialized LLMs and speech synthesis. Its smaller-business customers are already operating entirely on SoundHound's own stack, and management believes greater use of proprietary models can reduce costs while improving accuracy, latency and control.

Expanding Markets Add to SOUN's Tailwinds

SoundHound is increasingly diversified beyond its traditional automotive business. During the second quarter, it added and expanded customers across healthcare, financial services, restaurants, automotive and consumer devices. Restaurant adoption was particularly encouraging, with technology expanding across Five Guys, IHOP and Jersey Mike's, while a major pizza brand had SoundHound deployed in more than 75% of its locations. The company also signed an initial eight-figure multiyear partnership covering more than 20 countries in Latin America.

Voice Commerce offers another potential growth channel. SoundHound plans to pilot direct in-vehicle transactions and is working to bring agentic transactions to connected devices. If these initiatives scale, the company could move beyond software fees and participate more directly in transaction-based opportunities.

The planned LivePerson acquisition could further expand SoundHound's enterprise footprint. Management expects the transaction to add relationships with 25 Fortune 100 companies and believes OASYS can provide a common platform for integrating acquired technologies.

Losses, Cash Burn and Valuation Remain Key Risks

Despite the operating progress, SoundHound has not yet reached profitability. Second-quarter GAAP net loss was $42.8 million, while the non-GAAP net loss totaled $9 million. For the first six months of 2026, operating activities used nearly $60 million of cash, up from $43.7 million in the year-ago period. The company nevertheless ended June with about $203 million in cash and no debt, providing financial flexibility while it continues investing in growth.

The acquisition strategy adds another layer of execution risk. Integrating LivePerson while continuing to migrate customers from previously acquired businesses onto OASYS will require careful execution. Management acknowledged that legacy customers will move to OASYS at different speeds rather than through a rapid forced migration.

Valuation also leaves little room for major execution setbacks. SOUN trades at 12.34X forward 12-month sales, slightly above the Zacks Computers - IT Services industry's 12.23X. Investors are therefore paying a premium for growth despite continued losses and cash use.

SOUN’s P/S Ratio (Forward 12-Month) vs. Industry

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SOUN Still Trails the Market Despite Q2 Momentum

SoundHound shares are down 25.6% year to date, underperforming the Zacks Computers - IT Services industry's 14.3% decline. The gap is much wider against the broader Zacks Computer and Technology sector, which has gained 16.9%, and the S&P 500's 12.5% advance.

SOUN’s YTD Price Performance

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The weak share-price performance suggests that investors remain cautious about profitability, valuation and execution. However, the combination of stronger second-quarter results, raised revenue guidance and improving earnings estimates gives the stock a stronger fundamental base than its year-to-date performance implies.

How SoundHound Measures Up Against Key AI Rivals

SoundHound faces different competitors across its expanding AI markets. Cerence CRNC competes directly in automotive voice AI, conversational assistants and in-car AI solutions, while Five9 FIVN competes in cloud contact centers, voice bots and customer engagement automation. NICE NICE also competes in enterprise conversational AI, contact center automation and AI-powered customer service.

SoundHound's 25.6% year-to-date (YTD) plunge trails Cerence's 19.1% dip and NICE's 12.8% decline, while Five9 has surged 55.6%. Valuation makes the difference even sharper. SoundHound's 12.34X forward sales multiple is far above Cerence at 1.26X, Five9 at 1.78X and NICE at 1.71X.

That premium means SoundHound must deliver much faster growth to justify its valuation. Cerence remains an important automotive benchmark, while Five9 and NICE bring established enterprise customer bases. SoundHound's advantage rests on OASYS, its proprietary voice technology and its ability to connect enterprise, automotive and physical AI experiences on one platform.

Is SOUN Stock a Buy Now?

SoundHound's investment case has strengthened following the second quarter. Record revenues, accelerating OASYS adoption, improving margins, a higher 2026 revenue outlook and favorable estimate revisions all point toward better operating momentum. The expansion across healthcare, financial services, restaurants, automotive and Voice Commerce also reduces reliance on any single end market.

Risks remain meaningful. SoundHound is still losing money and burning cash, the LivePerson deal introduces integration risk, and its valuation carries a sizable premium to Cerence, Five9 and NICE. The stock's 25.6% YTD decline shows that investors continue to demand proof that rapid revenue growth can eventually translate into sustainable profits.

Still, upward estimate revisions following a strong second quarter improve the risk-reward setup. With SoundHound currently carrying a Zacks Rank #2 (Buy), investors willing to accept higher volatility and execution risk can consider the stock for its long-term exposure to conversational and agentic AI growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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