From a penny stock trading at around $2 per share at the start of 2024, SoundHound AI (SOUN) stock has made significant gains, rising 693% to near $16.50 per share. The market typically rewards artificial intelligence companies that can combine rapid growth and innovation with a clear path to profitability.

SoundHound AI’s second quarter earnings crushed analysts’ expectations. The company raised its revenue guidance for the full year. But it’s unprofitable, its gross margins are slipping, and its valuations look frothy.

The primary concern for investors is whether the stock remains a solid investment following such a considerable increase.