SoundHound AI Inc (SOUN) continued its downward trajectory, plunging 5.06% in Friday's pre-market session, following a 9.55% decline on Thursday. The AI stock has been under pressure due to concerns over the Federal Reserve's projections and the company's lofty valuation.
The sell-off in AI stocks, including SoundHound, was initially triggered by the Federal Reserve's updated economic projections on Wednesday. The central bank signaled fewer interest rate cuts and higher inflation for 2025, dampening investor sentiment towards speculative and growth-oriented stocks like SoundHound.
Additionally, SoundHound's surge in valuation this year, with the company now commanding a market capitalization of around $8 billion, has raised eyebrows among analysts. Some experts have expressed concerns about the company's ability to maintain its lead in the voice AI market and sustain its growth momentum, particularly in the face of stiff competition from industry giants like NVIDIA.
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