SoundHound AI Inc (NASDAQ:SOUN) witnessed a significant 24% decline in its stock price on Friday following the release of disappointing quarterly results, dampening the excitement generated by a notable rally last month fueled by growing interest in artificial intelligence.
Trading at $5.7, the company’s shares were on track for their most substantial single-day drop in 14 months. This downward trend also impacted other AI-related stocks, with Guardforce AI (NASDAQ:GFAI), Bullfrog AI Holdings (NASDAQ:BFRG), and BigBear.ai Holdings (NYSE:BBAI) experiencing declines ranging from 1% to 8%.
The surge in February, where the stock saw a remarkable 350% increase, marked its best-ever monthly performance. This surge was ignited by Nvidia’s (NASDAQ:NVDA) impressive forecast, which sparked a broader rally in AI-related companies as well as the overall U.S. stock market.
Despite receiving nearly $3.7 million in investment from Nvidia, SoundHound AI Inc. reported fourth-quarter revenue of $17.15 million, slightly below analysts’ expectations of $17.75 million. Additionally, the net loss per share of $0.07 exceeded the anticipated loss of $0.06, according to LSEG data.
While the midpoint of its 2024 revenue forecast of $63 million to $77 million surpassed Wall Street estimates, the underwhelming quarterly performance led to a dip in investor confidence. The positive momentum generated by C3.ai’s (NYSE:AI) strong third-quarter results and optimistic full-year revenue forecast on Thursday somewhat countered the downward trend in AI stocks. However, C3.ai’s shares experienced a 4.2% decline following a remarkable 49% surge in February.
Despite the setback, D.A. Davidson maintained a “buy” rating on SoundHound AI Inc. and raised the price target to $7.5 from $5.0, highlighting the company’s ability to gain market share and attract potential customers.
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Author Faith Yakubu 
