SoundHound AI Is Sinking Today -- Is It Time to Buy the Stock?

SoundHound AI (NASDAQ: SOUN) stock is seeing another day of big sell-offs in Tuesday's trading. The company's share price was down 6.4% as of 1:50 p.m. ET and had been down as much as 10% earlier in the day.

SoundHound AI and other growth-dependent artificial intelligence (AI) stocks are seeing big valuation pullbacks in today's trading as investors adjust to emerging macroeconomic risk factors. News that the Trump administration plans to move ahead with substantial new tariffs has added to existing concerns about higher-than-anticipated inflation, and reports that new restrictions will be placed on the export of semiconductors to China are also causing risk-off sentiment in the market.

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Adding another bearish catalyst for SoundHound AI stock, investors are feeling some nerves ahead of Nvidia's Q4 report tomorrow. The artificial intelligence (AI) giant's Q4 results and forward guidance will provide some insights into the overall growth outlook in the AI market. SoundHound stock is now down 55% year to date.

Is SoundHound AI stock a buy right now?

Despite a big pullback recently, SoundHound AI's share price is still up 127% over the last year -- and the $3.5 billion company is valued at approximately 21 times this year's expected sales. Considering the company's heavily forward-looking valuation, it's reasonable to expect that the stock will continue to see high levels of volatility in the near term, and tomorrow's Q4 report for Nvidia looks poised to be a significant catalyst for the conversational AI-specialist's share price.

Accordingly, investors who don't have a high tolerance for risk and volatility should still continue to steer clear from the stock right now. On the other hand, the big valuation retracement for SoundHound has meant that shares are no longer trading at such extreme valuation levels. The stock is still risky and commands a premium based on the business' expansion potential, but the company's recent sales growth and forward forecasts have been strong enough to support a bull case at current levels.

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