Better AI Stock: SoundHound AI vs. C3.ai

Plenty of companies are slapping "AI" onto their products, their press releases, and their investor pitches these days. But only a handful went all-in and baked artificial intelligence right into their company names.

Today I'm comparing two of these deeply committed AI experts: SoundHound AI (NASDAQ: SOUN) and C3.ai (NYSE: AI). They jumped on the AI bandwagon before it was cool, though. One of them has owned the ticker symbol "AI" since December 2020, and the other added "AI" to its name in April 2022. As you know, the ongoing generative AI boom didn't start until November 2022, as OpenAI released ChatGPT to a curious world.

So, SoundHound AI and C3.ai are veterans of the AI trade, but which one deserves a spot in your portfolio?

Image source: Getty Images.

Round 1: AI expertise

These two companies have a lot of qualities in common.

• They entered the public stock market in recent years, but were founded way back in 2009 (C3.ai) and 2005 (SoundHound AI).
• After all these years, the founders are still closely involved in running the companies. Thomas Siebel recently stepped down from the CEO role but remains C3.ai's executive chairman. The three co-founders of SoundHound AI serve as CEO, Chief Product Officer, and Chief Science Officer today, and two of them also have seats on the board of directors.
• They started developing AI-based services right away. SoundHound AI's song-identification tool applied machine learning to hummable sound patterns; C3.ai focused its predictive data analytics on energy management at first. The lessons learned and AI systems that were developed around their early operations are still at each company's core in 2025.

However, I would argue that SoundHound AI has been more focused on a single topic over time. What started as a way to identify songs with your smartphone's microphone has evolved into a voice-driven system for drive-through windows, phone menus, vehicle infotainment systems, and more. C3.ai has changed names several times, attempting to find a stronghold in the Energy, Internet of Things, and AI industries.

Granted, I'm comparing two inveterate AI experts here, but SoundHound AI's single-minded focus gives it the edge in this round. C3.ai's AI portfolio may be broader, but SoundHound AI has a deeper understanding of one crucial technology -- AI-driven voice controls.

Round 2: Business prospects

Here's another round of similarities. Both SoundHound AI and C3.ai are running classic growth-stock business models, absorbing bottom-line losses and burning substantial amounts of cash on the hunt for rapid revenue growth.

However, SoundHound AI's growth is running circles around C3.ai these days:

SOUN Revenue (TTM) data by YCharts

SoundHound AI's top-line sales are still small next to C3.ai's, but that could change very soon. As you can see in the graph above, C3.ai's sales rose by 31% over the last three years while the audio interpretation expert's revenues more than quintupled.

And don't forget about SoundHound AI's backlog of long-term contracts, which should keep the revenue line rising for years to come. At the latest update in Q4 2024, the backlog was worth $1.2 billion with an average contract term of roughly 7 years. That was up from $661 million in 2023, and I can't wait to see how the order bookings stack up in the next full-year report, scheduled for February 2026.

In a battle of unprofitable growth stocks, I strongly prefer the one that's growing faster. That's an easy win for SoundHound AI.

Round 3: How expensive are these AI stocks?

It's time for a counterpunch. Profit-based valuation metrics such as price-to-earnings ratios and discounted cash flow calculations don't make sense here, because both companies are deeply unprofitable. So I have to compare them by price-to-sales and adjust for top-line growth instead.

Value investors, please look away. Keep the smelling salts handy.

C3.ai almost looks affordable here, trading at 5.5 times trailing sales. That's comparable to old-school tech titans like Cisco Systems or Automatic Data Processing -- mature giants with single-digit business growth.

SoundHound AI plays a different tune. Trading at 31 times sales, its revenue-based valuation is comparable to market darlings like Nebius Group. It makes mighty Nvidia (NASDAQ: NVDA) look like a bargain at 23 times sales.

You could argue that SoundHound AI's valuation ignores that promising order backlog, but that's moving the goalposts. C3.ai earned a win in this round, despite SoundHound AI's superior sales growth.

Winner by technical knockout: SoundHound AI

Two rounds to one, SoundHound AI takes home the championship belt. It's pricier, sure, but you get what you pay for: sharper AI focus, faster growth, and $1.2 billion in contracted future revenue.

C3.ai isn't a bad company, but SoundHound AI is the better stock to buy today. The voice-control specialist is winning on the metrics that matter most to me, and its valuation should start to make sense in 2026 or 2027.

Anders Bylund has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends Nvidia and SoundHound AI. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.