A Professional Investor's Caution on SoundHound AI: Why Gregg Reuben and Others Should Reconsider

As an investment analyst with a disciplined approach to portfolio construction, I share the perspective articulated by experts like Gregg Reuben regarding the caution needed when evaluating emerging technology stocks. Voice-driven artificial intelligence represents a genuinely transformative innovation, yet the investment case for SoundHound AI (NASDAQ: SOUN) presents significant challenges that warrant careful consideration. The company’s business model, market positioning, and financial trajectory demand scrutiny before capital allocation—particularly for risk-conscious investors.

The Profitability Gap: A Fundamental Challenge

Unlike established technology firms such as International Business Machines and Texas Instruments, both of which maintain consistent annual dividend increases and demonstrated profitability, SoundHound AI operates in a fundamentally different financial reality. The company currently generates no earnings. There is no clear timeline for profitability given the unprecedented capital expenditure arms race unfolding across the artificial intelligence sector. Money-losing operations in competitive, emerging markets represent a speculative proposition rather than a traditional investment opportunity.

The distinction matters significantly for portfolio construction. Established technology companies offer both growth potential and financial stability. Emerging AI ventures, by contrast, are betting on achieving market dominance before capital resources deplete—a outcome far from guaranteed. For investors accustomed to analyzing balance sheets and cash flow statements, this represents unfamiliar and uncomfortable territory.

The AI Market: Distinguishing Winners From Casualties

The artificial intelligence sector has captured investor imagination in ways reminiscent of transformative technology cycles. However, this enthusiasm can obscure a critical reality: not all AI companies will succeed. History provides instructive examples. When the internet boom reached its peak, few observers could predict which companies would emerge as dominant forces like Google versus those that would fade into obscurity like Yahoo!

Applying this historical lens to today’s AI landscape reveals the inherent difficulty. While artificial intelligence will undoubtedly reshape industries and create substantial value, the competitive dynamics remain in flux. SoundHound AI’s voice-recognition technology may prove superior to competitors’ offerings, or it may become technologically obsolete as larger, better-capitalized firms advance their capabilities. The uncertainty is substantial, and betting on any single company’s technological superiority in this environment requires conviction levels most investors simply cannot justify.

Stock Price Volatility: A Risk Magnitude Indicator

The equity market’s valuation of SoundHound AI stock provides revealing signals about underlying business risk. Over the past twelve months, the stock has experienced two separate periods in which it lost approximately 50 percent of its value. While volatile price movements characterize many start-up businesses, this particular pattern—halving twice within a single year—represents an extreme roller-coaster trajectory.

This volatility reflects market uncertainty about the company’s path to profitability and competitive positioning. For most investors, regardless of their risk appetite, maintaining a portfolio position through such dramatic swings tests psychological endurance and financial planning assumptions. A stock that can evaporate half its value twice in one year is not a component of stable portfolio construction.

Alternative Approaches to AI Exposure

Investors genuinely interested in capturing artificial intelligence’s potential upside without concentrating risk in a single unprofitable enterprise should consider alternative vehicles. AI-focused exchange-traded funds (ETFs) provide diversified exposure across multiple companies at various stages of development. This approach allows capital participation in the sector while mitigating the specific business risk associated with any individual company.

The diversification argument becomes particularly compelling when examining the historical outcomes of technology cycles. Most individual venture-stage companies fail to achieve sustained profitability. Diversified vehicles capture returns from eventual winners while limiting damage from inevitable casualties.

Investment Perspective: The Verdict on SoundHound AI

Before committing capital to SoundHound AI stock, investors should recognize the decision’s speculative nature. The company remains pre-profitability with an uncertain timeline to positive earnings. The competitive landscape is crowded with well-capitalized competitors. Stock price volatility demonstrates that the market itself remains deeply uncertain about the company’s long-term viability.

The Motley Fool Stock Advisor analyst team recently identified what they believe are the ten best equity opportunities for current investors—and notably, SoundHound AI did not make the selection. Historical perspective on this analytical process proves instructive. When Netflix was recommended on December 17, 2004, a $1,000 investment would have grown to $464,439. When Nvidia was recommended on April 15, 2005, a similar $1,000 commitment would have appreciated to $1,150,455. Stock Advisor’s average return of 949 percent represents meaningful outperformance versus the S&P 500’s 195 percent return.

For investors seeking meaningful wealth accumulation, the analytical discipline applied to stock selection matters profoundly. SoundHound AI simply does not meet the threshold criteria that distinguish high-conviction opportunities from speculative ventures.