Why SoundHound AI Stock Is Crashing Today

SoundHound AI (NASDAQ: SOUN) stock is getting hit with big sell-offs in Wednesday's trading. The company's share price was down 14.4% at 11:15 a.m. ET amid a 0.1% decline for the S&P 500 index and a 0.3% pullback for the Nasdaq Composite index. The conversational artificial intelligence (AI) specialist's share price had been down as much as 17% earlier in the day's trading.

SoundHound AI stock is losing ground in conjunction with bearish pressures facing the broader market as investors weigh economic risk factors related to President-elect Trump's proposed tariff policies. The company's share price is also getting hit hard as investors consider rising competitive pressures.

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SoundHound AI stock falls on potential Trump tariff move

According to reports, President-elect Trump is weighing the possibility of declaring a national emergency in order to implement sweeping new tariff policies once he comes into office. Trump is reportedly looking to use powers granted to the president through the International Economic Emergency Powers Act to rapidly introduce new tariffs in an attempt to rebalance global trade relationships.

While the long-term impacts of such a move are unclear, the market is clearly not happy with the news. SoundHound AI and other stocks with speculative, growth-dependent valuations are being hit particularly hard as investors digest new macroeconomic risk factors and uncertainty.

Is SoundHound AI about to face a surge of new competition?

Thus far, SoundHound AI has had a clear forefront position in the conversational AI space. This distinction has helped the company's stock rocket higher, and its share price is still up 659% over the last year, even after a big recent pullback. But it seems the software specialist could soon face intensifying competitive pressures.

Investors had been hoping that SoundHound AI would get a shout-out from Nvidia at its presentations at this year's Consumer Electronics Show (CES). Instead, new technologies from the AI leader have actually highlighted the competitive risks it faces.

Nvidia and other large tech players are in the process of rolling out new agentic AI offerings, which essentially consist of trainable workers that can be adapted to perform a variety of tasks. Many of the large language models being built and trained to support new agentic AI tools will have support for voice-based interfaces, which might mean they could wind up quickly encroaching on SoundHound AI's turf.

While strong sales growth and excitement surrounding its technologies have helped push the company's valuation up to roughly $5.7 billion, the conversational AI specialist is still a relatively small player in the broader tech field -- and it could face significant pressures from more resource-rich competitors.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.