The stock market has undergone significant volatility this year, primarily driven by challenging macroeconomic conditions and the impact of the Trump administration’s tariff policies. Despite these challenges, the artificial intelligence (AI) sector has shown remarkable resilience and continues to thrive and grow. Investors are increasingly recognizing the potential of AI technologies to revolutionize various industries, which has led to a surge in interest and investment in this dynamic sector.
As a result of this substantial AI industry growth, several high-performing AI stocks have emerged, including SoundHound AI (SOUN 0.91%) and BigBear.ai (BBAI -2.35%). Over the past year, SoundHound’s shares have skyrocketed by an impressive 127% as of June 16, while BigBear.ai’s stock has experienced an even more remarkable increase of 214%. This dramatic growth highlights the potential opportunities for investors in the AI space.
Both of these AI companies have undergone significant transformations in the past year. Evaluating their current positions can provide valuable insights to help you determine which company might represent a more favorable AI stock investment for long-term gains.
Image source: Getty Images.
Exploring the Innovations of SoundHound AI
SoundHound has developed a cutting-edge AI technology that can understand human speech in an impressive 25 languages. The company initially launched with a music recognition app, but its innovative technology has since evolved to facilitate voice commands in vehicles. This feature has been successfully adopted by major automakers such as Stellantis, showcasing the versatility and applicability of SoundHound’s solutions.
In 2024, SoundHound experienced a pivotal year marked by strategic acquisitions that diversified its offerings across various sectors, including restaurants, healthcare, and finance. These expansions have significantly broadened the company’s reach and market presence.
As a result of these initiatives, SoundHound achieved record-breaking first-quarter revenues of $29.1 million, representing an astonishing 151% year-over-year growth. The company also ended the first quarter with a clean slate, holding no debt and boasting a healthy balance sheet.
At the end of Q1, SoundHound reported total assets amounting to $587.5 million, with $245.8 million available in cash and equivalents. Notably, the company’s liquid assets alone surpassed its total liabilities of $190.5 million, illustrating its strong financial position.
Looking ahead, the future appears promising for SoundHound. The company reports that numerous businesses are in the process of upgrading their existing answering systems to leverage AI technologies. CEO Keyvan Mohajer emphasized the company’s optimism, stating, “Our pipeline is the largest it’s ever been and our total addressable market (TAM) continues to expand, giving us confidence that we have a massive opportunity to significantly grow our business for years to come.”
To underscore this optimism, SoundHound has projected full-year revenue for 2025 to reach between $157 million and $177 million, a substantial increase from 2024’s revenue of $84.7 million, signifying a robust growth trajectory.
Analyzing BigBear.ai’s Strategic Positioning
BigBear.ai commenced 2025 with a transformative leadership change, appointing new CEO Kevin McAleenan, who is focused on steering the company towards leveraging artificial intelligence to address critical infrastructure and national security challenges. This strategic pivot is particularly relevant, given his previous experience as acting secretary of the U.S. Department of Homeland Security during President Trump’s first term, which provides him with unique insights into the sector’s needs.
The AI solutions developed by BigBear.ai have gained traction with notable clients, including the U.S. Department of Defense, London Heathrow and Dallas Fort Worth airports, as well as Austal, a prominent shipbuilder. This adoption highlights the company’s relevance and the trust placed in its innovative technologies.
BigBear.ai’s customer base expansion has positively impacted its financial performance, leading to a 5% year-over-year revenue increase in Q1 to $34.8 million. Despite the challenges posed by the current macroeconomic landscape, BigBear.ai projects its full-year revenue for 2025 to rise to between $160 million and $180 million, a slight increase from the $158.2 million reported in 2024.
However, it is essential to note that BigBear.ai is currently not profitable. The company faced an operating loss of $21.2 million in Q1, primarily attributed to rising operating expenses that have outpaced revenue growth.
Evaluating Investment Potential: SoundHound AI vs. BigBear.ai
When weighing the decision to invest in either SoundHound AI or BigBear.ai, one critical factor to consider is the stock valuation. A valuable metric used in this analysis is the price-to-sales (P/S) ratio, which indicates how much investors are willing to pay for each dollar of revenue generated by the company. This metric is particularly useful for assessing companies that are not yet profitable.
Data by YCharts.
The accompanying chart demonstrates that while SoundHound’s P/S multiple has decreased from its earlier high valuations at the beginning of the year, it still remains significantly higher than that of BigBear.ai. In fact, SoundHound’s P/S ratio surpasses that of AI leader Nvidia, whose P/S ratio stands at 24, suggesting that SoundHound shares may be overpriced, which might position BigBear.ai as the more attractive value investment.
However, it’s worth noting that BigBear.ai’s modest 5% year-over-year revenue growth in Q1 is somewhat disappointing for a company operating within the rapidly growing artificial intelligence market. This lackluster performance raises concerns about its ability to achieve profitability in the future. Additionally, BigBear.ai’s Q1 balance sheet reveals that over $100 million of its total liabilities amounting to $198.5 million is comprised of debt, with total assets recorded at $396.3 million.
In contrast, SoundHound showcases strong sales growth alongside a robust balance sheet. Further highlighting this positive outlook, CFO Nitesh Sharan stated, “We remain committed to our path to profitability and … expect to achieve adjusted EBITDA profitability by the end of 2025.”
Based on this comprehensive analysis, SoundHound appears to be the superior AI investment option for long-term growth. However, given the current elevated valuation of its stock, potential investors may want to consider waiting for a more favorable entry point before making a purchase decision.
