Why Traders Are Doubling Down on SoundHound Stock After Big Rally

Key Points

• SoundHound stock has been on a tear over the past quarter, though call option traders believe there is much more upside to be had in the coming months.
• A quickly expanding consumer base and financials stand as the foundation for more rallies to come.
• Institutions are buying into this story, justifying the high convictions carried by these traders.

SoundHound AI Inc. NASDAQ: SOUN finds itself in the spotlight after unusual options activity. 

In mid‑September, SOUN options trading volumen has surged well above normal levels, with traders buying 285,314 call options. This represents a 106.1% increase over the stock’s average volume of 138,428—and that traders could be bracing for a major move in the stock.

While options activity alone doesn’t reveal whether the bets are bullish or bearish, it does highlight growing conviction around SoundHound’s near-term outlook.

SoundHound shares have already climbed 90.4% over the past quarter. The fact that traders are still piling into the options market after a strong rally suggests many believe the stock has room to run higher. 

This heightened activity comes with caveats: options are leveraged bets with expiration dates, meaning the stakes—and the risks—are much higher. High activity in this market typically reflects strong conviction, and in SoundHound’s case, the signal is hard to ignore.

Strong Revenue Growth Fuels Market Confidence

Is there fundamental strength behind this momentum?

SoundHound report that its revenues grew to $42.7 million for the quarter in its most recent earnings report, representing an eye-catching 217% jump compared to the same quarter last year.

Management has also successfully kept the diversification of this revenue at the forefront with new enterprise customers across industries like automotive, healthcare, retail, and financial services. If one sector slows down, there are others that could help offset its impact. 

In addition, for high-expansion tech firms like SoundHound, the recent Federal Reserve rate cuts could ease borrowing costs, enhancing the company's growth potential.

A Small Cap With Big Growth Ambitions

Considering how rapidly the company's revenue is growing and how quickly it signs up new customers and users each quarter, expectations for SoundHound stock are high, especially now that call option volumes have broken away from their usual levels.

SoundHound's $7.5 billion market cap and presence in the high-growth AI space indicate there is still plenty of room for upside, especially as the company edges closer to profitability.

SOUN trades at a price-to-book (P/B) ratio of 39.3x, a hefty premium commanding a massive premium compared to the computer sector's average of only 7.4x. That kind of valuation is typical of early-stage companies entering hyper-growth mode, where some investors are willing to risk overpaying now for access to SoundHound's future growth stream.

Institutional Investment Supports the Rally

Institutional backing is another vote of confidence for SoundHound. Like Geode Capital Management, for example, which increased its holdings by 8.3% in August 2025, bringing its total investment to $94.8 million, or 2.2% ownership.

But investors should proceed with caution. Valuation is rich, and the stock’s recent gains make it vulnerable to profit-taking.

However, if SoundHound can continue signing clients, improving margins, and moving closer to profitability, the current momentum may have plenty of room to run. When the options market is betting this big, retail investors watching from the sidelines may want to take notice.