SoundHound AI (SOUN) experienced a significant decline today, closing at $14.07, down 11.17% from the previous close of $15.84. The stock opened at $14.10 and fluctuated between a high of $15.37 and a low of $13.80, with trading volume at 45,364,740 shares, which is 61.48% of the average volume.
The primary driver of today's decline appears to be concerns over the competitive threat posed by Chinese firm DeepSeek's new AI models. DeepSeek's R1 AI model, noted for its cost efficiency and reduced energy consumption, has raised fears about the potential disruption to U.S. AI companies, including SoundHound. This has led to a broader selloff in AI stocks as investors worry about the implications for U.S. technological leadership in AI.
Social media discussions reflect skepticism about DeepSeek's impact, with some users on Reddit dismissing it as a "nothing burger" for SoundHound, arguing that DeepSeek's reliance on reinforcement learning without human feedback limits its effectiveness in nuanced language understanding. Others express concern about the broader market impact, noting that SoundHound's association with NVIDIA, which also faced pressure, contributed to the stock's decline.
Despite the negative sentiment, some analysts maintain a positive outlook on SoundHound, with recent options activity indicating mixed investor sentiment. Approximately 50% of investors remain optimistic, while others are cautious, reflecting the uncertainty surrounding the stock's near-term prospects.