SoundHound AI Inc (NASDAQ: SOUN) rallied nearly 10% on Tuesday morning after announcing a major partnership with the casual dining seafood restaurant chain, Red Lobster.
The voice artificial intelligence (AI) firm will deploy its technology across all Red Lobster locations – enabling automated phone ordering to ease staff workload and improve customer experience.
Including today’s rally, SoundHound stock is up more than 160% versus its YTD low in April.
What the Red Lobster deal means for SoundHound stock
SOUN stock is extending gains today primarily because Red Lobster is the world’s largest seafood chain.
Winning it as a client, therefore, is a major validation of the company’s enterprise strategy.
By integrating its voice AI offerings into Red Lobster’s operations, SoundHound is proving that its technology can scale across high-volume, multi-location restaurant chains.
The system is trained on Red Lobster’s full menu and designed to make sure that no customer call goes unanswered – even during peak hours.
For SoundHound, this agreement opens doors to other major foodservice brands and reinforces its positioning as a leader in conversational AI for hospitality.
In short, it’s a clear sign that SOUN’s tech is moving from pilot projects to full-scale deployment.
Why investors should look beyond valuation in SOUN shares
Yes, SoundHound shares are trading at a lofty valuation – around 78 times sales – but the growth story sure is hard to ignore.
The company based out of Santa Clara, CA posted a 217% year-over-year increase in revenue for its fiscal Q2 and guided for it to hit $178 million this year – nearly double the 2024 figure.
With clients like Red Lobster, Chipotle, and Papa John’s already onboard, SoundHound is building a diversified revenue base across restaurants, automotive, and financial services.
Its proprietary Polaris model and over 280 patents give it a defensible edge in voice AI.
While profitability remains elusive, the Nasdaq-listed firm holds $246 million in cash and zero debt – a strong foundation for scaling.
For long-term investors, SOUN stock’s valuation may be a premium worth paying.
Should you invest in SoundHound shares today?
All in all, SoundHound’s stock price rally looks more than just hype – it’s backed by real enterprise traction and accelerating revenue.
The Red Lobster partnership adds credibility and reach, while the firm’s tech moat and financial flexibility support continued expansion.
Sceptics can baulk at valuation all they want, but SOUN is rapidly proving it can convert innovation into commercial wins.
If it continues to land marquee clients and deepen its AI capabilities, SoundHound could be one of the more compelling growth stories in the voice tech space – which is why Wall Street’s consensus rating on it remains at “overweight”.
That said, SOUN shares remain unattractive for income-focused investors as they do not currently pay a dividend.
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