SoundHound AI (NASDAQ: SOUN), a voice AI platform that helps businesses deliver conversational AI experiences, has certainly attracted investor interest with its AI-led growth narrative. However, the stock’s history of sharp swings and recent market setup point to meaningful downside risk.

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.

Tech stocks were under pressure this week as Wall Street’s AI enthusiasm slowed and investors adjusted portfolios after a strong summer rally.

Palantir's price-to-sales ratio of 114 is way above OpenAI's 17. Palantir's success in defense work could block access to growth as enterprise AI payoff remains elusive

These stocks offer investors exposure to the booming AI market at reasonable valuations. Stock market indices are experiencing a slowdown after rising rapidly in 2025. *Stock prices used were the afternoon prices of Aug.

The nuance here is that the dot-com bubble was defined by abundance — too many companies, too much capital, and too many competing investment ideas. Meanwhile AI, at least so far, offers a story of scarcity built almost entirely on a single company.

AI hyperscalers like Amazon, Microsoft, Alphabet, and Meta have invested billions in developing the technology and plan to spend even more — but history has a warning for their stock price.

C3.ai recently released preliminary numbers for the first quarter, which came in well below its guidance. The company's CEO is stepping down due to health issues, and that has played a role in the worse-than-expected results.

Opendoor is going big on AI and the stock is surging, but some express concern that a ”meme” frenzy is masking problems with the business.

Edgen launches AI-driven stock picks, ratings, and forecasts with instant market reports for smarter investing.

Palantir is a bigger AI company than SoundHound in terms of revenue. The latter's smaller revenue base explains why it is growing at a much faster pace than Palantir right now. So, investors looking for faster growth are likely to prefer SoundHound over Palantir. Another factor in SoundHound's favor is its cheaper valuation.