Why SoundHound Stock Plummeted Today

Shares of SoundHound AI (NASDAQ: SOUN) tumbled Monday. The stock lost 11.2% as of 4:30 p.m. ET, but was down as much as 12.9% earlier in the day. The slip comes as the S&P 500 and Nasdaq composite lost 1.5% and 3.1%, respectively.

SoundHound's stock has struggled since its presentation at CES 2025, down nearly 30% since the event kicked off in early January. Today was especially rough, however, as the market digested news of the disruptive Chinese artificial intelligence (AI) entry, DeepSeek.

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SoundHound fails to impress

CES is a big event in the world of tech and investors pay close attention to what comes out of it. The company's presentation was much anticipated, but unfortunately the demo of its in-car voice "commerce" platform disappointed. The platform appeared to provide marginal value while increasing costs and power consumption. Some investors were understandably underwhelmed. Since the event, SoundHound's stock has struggled.

New Chinese entrant causes alarm

The underwhelming CES performance meant that SoundHound's stock was especially susceptible to the DeepSeek news affecting the whole market. DeepSeek, created by a firm out of China, is a new entrant in the AI arms race. Despite lacking the hardware and funding its U.S. counterparts enjoy, DeepSeek's team was able to create an AI model that rivals those made by OpenAI and Amazon. Investors are worried that demand for U.S. hardware could weaken and that U.S. technology would be leapfrogged. SoundHound and other AI stocks saw a sharp decline amid the fear.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.