SoundHound AI (NASDAQ:SOUN) stock is up roughly 6% in early trading Thursday, extending what’s become a compelling back-to-back surge. Yesterday, SOUN surged approximately 13%, and today’s follow-through is drawing fresh attention from momentum traders and short sellers alike. For full context on how this rally started, see our coverage of yesterday’s initial move.
Still, SOUN stock remains down 21% year-to-date. The question investors are asking this morning: is this a genuine momentum shift, or a short-lived squeeze?
Short Squeeze Pressure Builds
A significant driver behind the two-day move is short squeeze mechanics. SoundHound AI carries short interest of 32% of float, more than double the peer average of 14%. That kind of elevated short positioning creates a feedback loop: as the stock rises, short sellers face mounting losses and may be forced to cover, which pushes the price higher still.
Aggressive options activity and intense social media discussion are amplifying the dynamic. With back-to-back gains now on the board, the SOUN stock squeeze narrative is gaining credibility among retail traders watching the tape closely.
Business Momentum Backs the Buzz
The rally isn’t purely technical. SoundHound AI has delivered a string of meaningful business wins that give the move some fundamental support. Quálitas expanded its partnership with SoundHound AI for agentic AI claims resolution, resulting in a 150% increase in call volume managed by AI since 2022. Peet’s Coffee deployed SoundHound AI’s “BaristAI” across all U.S. retail locations, a visible consumer-facing win that reinforces the company’s reach beyond automotive.
Experis (ManpowerGroup) named SoundHound AI its exclusive conversational AI partner for enterprise clients, with a healthcare focus. SoundHound AI also launched its Edge Agentic+ platform for automotive applications, extending its agentic AI positioning into a high-value vertical. These are the kind of enterprise contract wins that support the company’s 2026 revenue guidance of $225 million to $260 million.
Earnings Track Record Gives Bulls Confidence
With Q1 2026 earnings expected around May 12, investors are positioning ahead of what they hope will be another beat. The historical track record supports that optimism. In Q4 2025, SoundHound AI reported EPS of -$0.02 versus a consensus estimate of -$0.0983, a beat of nearly 80%. Revenue came in at $55.06 million, topping the $53.98 million consensus.
Moreover, SoundHound AI’s full-year 2025 revenue reached $168.92 million, nearly doubling from FY2024. Non-GAAP gross margin expanded to 61% in Q4 from 52% a year earlier, a sign that operating leverage is beginning to materialize. CEO Keyvan Mohajer said on SoundHound AI’s Q4 call, “Our results speak for themselves. All key profit metrics were up and in the last quarter we closed a record number of customer deals as we capitalized on the surge in demand for enterprise-grade AI.”
Analyst Targets Suggest Room to Run
Wall Street’s bull case is well above where SOUN stock is trading right now. Cantor Fitzgerald has a Buy rating with a $15 price target, while H.C. Wainwright carries a Buy with a $20 target. The average analyst price target sits near $14.50, implying significant upside from current levels if the business continues to execute.
That said, the bears have a real case too. SoundHound AI carries a price-to-sales ratio of 24x versus an industry average of 3x. The company posted a trailing twelve-month net loss of $14 million and burned through $98.22 million in operating cash flow for FY2025. The CFO also departed on April 3, with co-founder James Hom stepping in as interim CFO, adding a layer of leadership uncertainty heading into earnings.
There’s also a class action lawsuit against SoundHound AI alleging false statements and concealed material weaknesses in internal controls. These aren’t trivial concerns. Investors willing to hold through earnings need to weigh the compelling revenue growth story against a balance sheet that still relies heavily on equity issuances and carries $80.6 million in annual stock-based compensation.
Watch for whether today’s gains in SoundHound AI stock hold into the close. With 26 days until the expected Q1 2026 earnings report, momentum traders and short sellers are likely to keep SOUN active through the session. That earnings print is the next major catalyst to watch.
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