SoundHound Stock Takes a Hit Amid Market Turbulence

The shares of SoundHound AI (SOUN) saw a significant drop on Monday, losing 11.2% by 4:30 p.m. ET, with the stock sinking as much as 12.9% earlier in the trading session. This decline coincided with a broader market downturn, as the S&P 500 and Nasdaq composite suffered losses of 1.5% and 3.1%, respectively.

SoundHound's stock has faced challenges since its presentation at CES 2025, declining nearly 30% since the event began in early January. However, today was particularly unfavorable due to the market's reaction to the introduction of a new Chinese artificial intelligence (AI) player, DeepSeek.

SoundHound's Disappointing CES Performance

CES is a significant event in the tech world, attracting the attention of investors and industry experts alike. SoundHound's presentation was highly anticipated, yet the demo of its in-car voice "commerce" platform did not meet expectations. Instead of showcasing innovation and value, the platform appeared to add little while also increasing costs and power consumption, leaving many investors feeling disappointed. Following this underwhelming performance, SoundHound's stock has struggled to regain momentum.

Concerns Over Chinese AI Competition

The disappointing results from CES made SoundHound particularly susceptible to negative news related to the new AI player, DeepSeek. Developed by a Chinese company, DeepSeek has entered the competitive AI landscape and has built an AI model that can compete with technologies created by Amazon and OpenAI. Although DeepSeek may not have the same funding or resources as its U.S. counterparts, its capabilities have raised concerns among investors. There are fears that the demand for U.S. hardware could decline as U.S. technology risks falling behind. In light of this anxiety, stocks in the AI sector, including SoundHound, experienced a swift decline.

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