SoundHound Stock Faces Major Decline

Shares of SoundHound AI (SOUN -11.17%) experienced a significant drop on Monday, losing 11.2% by the time the market closed at 4:30 p.m. ET. Earlier in the day, the stock had seen a decline of up to 12.9%. This downturn occurred alongside a broader market slump, with the S&P 500 and the Nasdaq composite losing 1.5% and 3.1%, respectively.

Since its presentation at CES 2025, SoundHound's stock has faced challenges, plummeting nearly 30% since the event kicked off in early January. The current decline is particularly notable as it coincides with emerging news regarding new competition in the artificial intelligence (AI) space from China, specifically a company called DeepSeek.

Disappointing Presentation at CES

The CES event is one of the biggest platforms for technology companies, attracting significant attention from investors. SoundHound’s presentation was highly anticipated, but it failed to meet expectations. The demo for its in-car voice "commerce" platform showcased a product that offered limited value while also increasing costs and power consumption. As a result, some investors found the product uninspiring, leading to a negative reaction in the stock market.

Concerns Over New Chinese Entrant

The lackluster performance at CES left SoundHound's stock especially vulnerable to negative news surrounding the new AI model DeepSeek, which has emerged from China. Although DeepSeek does not have the hardware or funding advantages that many U.S. companies enjoy, its team has developed an AI model that can compete with those from OpenAI and Amazon. Investors are now wary that the demand for U.S. AI technology might decrease, and there are fears that U.S. companies could be outpaced by advancements from international competitors like DeepSeek. This anxiety contributed to the sharp decline in SoundHound and other AI stocks.

The situation highlights the competitive landscape in the AI sector and underscores the importance of continual innovation and effective communication in capturing investor confidence.

stock, AI, competition