SoundHound AI (NASDAQ: SOUN) carries roughly 40% short interest, making it one of the most heavily shorted stocks trading on the market today.
The primary driver of bearish sentiment is the company’s pending acquisition of LivePerson (NASDAQ: LPSN), a business currently experiencing declining revenue and carrying considerable debt.
SoundHound AI has acknowledged it will work to quickly retire the inherited debt through a combination of cash and stock, raising the likelihood of a future equity raise.
High short interest is a double-edged sword, however, because heavily shorted stocks can experience dramatic short squeezes if the company proves skeptics wrong.
The strategic logic behind the LivePerson deal centers on gaining access to a large, established customer base concentrated in call centers and the broader customer service industry.
SoundHound AI’s goal is to retain those customers and migrate them to its higher-priced AI voice technology and agentic AI platform, potentially turning a challenged acquisition into a significant growth driver.
The company has already demonstrated an ability to integrate acquisitions effectively, with its earlier purchase of Amelia providing key technology that fed into the development of its new platform, OASYS.
OASYS is described as a voice-native agentic AI orchestration platform, and management has said its launch has increased excitement, accelerated deals, and produced wins in demos, requests for proposals, and pilot programs.
A particularly notable data point is that a large eight-figure deal was signed in less than 90 days after an initial demo, reflecting strong early commercial momentum since the platform’s May launch.
SoundHound AI reported Q2 revenue of $61.9 million, representing 45% year-over-year growth, though the company remains unprofitable with an adjusted loss of $0.02 per share.
Adjusted EBITDA came in at negative $9.6 million for the quarter, while gross margin rose 610 basis points year over year to reach 45.1%.
Adjusted gross margins were flat year over year at 58.4%, with management noting that acquisitions continued to have a temporary drag on overall gross margins.
The company’s stated long-term goal is to push gross margins above 70%, suggesting management believes its current margin profile does not reflect the business’s full potential.
SoundHound AI raised the low end of its full-year revenue guidance, now projecting between $230 million and $260 million, up from a prior range of $225 million to $260 million.
If the LivePerson acquisition closes by year-end as expected, the combined entity is projected to generate at least $350 million in revenue during 2027.
Despite that growth trajectory, the stock has been cut in half over the past year and still trades at a forward price-to-sales ratio of more than 12 times current-year estimates.
That elevated valuation, combined with ongoing cash burn and the risks introduced by the LivePerson deal, positions SOUN firmly in speculative territory for most investors.
Still, the early momentum behind OASYS and the company’s track record of integrating acquisitions provide a credible bull case for investors willing to accept the associated risk.
For those with a high risk tolerance, a small speculative position in SoundHound AI may be warranted given the platform traction and the potential upside if the LivePerson integration succeeds.
