Shares of SoundHound AI (SOUN -1.69%) 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.
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.
