SoundHound AI is an audio and artificial intelligence company valued at $1. 8 billion. It specializes in audio AI applications and has received investments from companies like Nvidia. However, there are some challenges that may impact its long-term investment potential. One challenge is the competition with technology giants like Microsoft and Alphabet. These companies have brand power and can bundle niche products with their existing offerings. Additionally, SoundHound AI has generated only $46 million in revenue over the past year, making it a relatively small company compared to its competitors. Another concern is the dilution of shares. SoundHound AI has had to issue more shares to raise funds, increasing the share count by 57% since going public.

This could lower the intrinsic value of each share. The company is also not yet cash-flow-positive and has $84 million in long-term debt. These financial factors are important considerations for investors. Moreover, the stock is considered expensive as it trades at a price-to-sales ratio of 29, despite having debt and no profits. While revenue grew 80% YoY last quarter, it is still a relatively small base at $46 million. Comparatively, SentinelOne, another AI company, has slower but steady growth and is well-funded with a P/S ratio of less than 9. While SoundHound AI may have potential, it is considered a risky investment at its current valuation. Investors seeking significant returns may find better opportunities elsewhere.