Better Artificial Intelligence Stock: SoundHound AI vs. BigBear.ai

The stock market has experienced a lot of volatility this year due to macroeconomic conditions, exacerbated by the Trump administration's tariff policies. In spite of this backdrop, the artificial intelligence (AI) sector continues to thrive.

Substantial AI industry growth has led to a number of high-flying AI stocks. Two of these are SoundHound AI (NASDAQ: SOUN) and BigBear.ai (NYSE: BBAI). SoundHound shares soared 127% over the past 12 months through June 16. In that time, BigBear.ai stock rose 214%.

These two AI businesses have seen dramatic changes over the past year. The position of each today can help you decide which is the better AI stock to consider investing in for the long haul.

Image source: Getty Images.

Digging into SoundHound AI

SoundHound built an AI capable of understanding human speech in 25 languages. The company began with a music recognition app. From this start, SoundHound's tech evolved to enable voice commands in cars, which was adopted by automakers such as Stellantis.

In 2024, the developer of voice-activated AI experienced a transformative year. SoundHound made key acquisitions that extended its business into restaurants, healthcare, finance, and other industries.

As a result, SoundHound achieved record first-quarter revenue of $29.1 million, which represented 151% year-over-year growth. The company also exited Q1 with no debt and a strong balance sheet.

Assets in the first quarter totaled $587.5 million with $245.8 million of that in cash and equivalents. SoundHound's stockpile of cash alone eclipsed Q1 total liabilities of $190.5 million.

In addition, the company's future looks bright. According to SoundHound, businesses are upgrading existing answering systems to AI, and CEO Keyvan Mohajer noted, "Our pipeline is the largest it's ever been and our TAM continues to expand, giving us confidence that we have a massive opportunity to significantly grow our business for years to come."

Illustrating his point, SoundHound forecast full-year 2025 revenue to reach between $157 million and $177 million. That's a substantial jump up from 2024's $84.7 million.

A look into BigBear.ai

BigBear.ai kicked off 2025 in a big way with a new CEO, Kevin McAleenan. He focused the company around applying artificial intelligence toward solving critical infrastructure and national security issues. The approach makes sense, since he served as acting secretary of the U.S. Department of Homeland Security during President Donald Trump's first term.

The company's AI technology has been adopted by the U.S. Department of Defense, London Heathrow and Dallas Fort Worth airports, and shipbuilder Austal.

BigBear.ai's customer growth helped the company expand Q1 revenue 5% year over year to $34.8 million. And despite today's uncertain macroeconomic climate, BigBear.ai anticipates its 2025 full-year revenue to increase to between $160 million and $180 million. That's up from the $158.2 million generated in 2024.

But BigBear.ai is not profitable. Year-over-year increases in several Q1 operating expenses resulted in an operating loss of $21.2 million.

Choosing between SoundHound AI and BigBear.ai

When deciding whether to invest in SoundHound or BigBear.ai, one factor to consider is stock valuation. To do so, here's a look at their price-to-sales (P/S) ratios, which measures how much investors are willing to pay for every dollar of revenue. This metric is commonly used with companies that aren't profitable.

Data by YCharts.

As the chart shows, SoundHound's P/S multiple has come down from the sky-high valuation at the start of the year, but it's still far higher than BigBear.ai. In fact, it's higher than AI leader Nvidia's P/S ratio of 24, which suggests SoundHound shares are overpriced, making BigBear.ai the better value.

That said, BigBear.ai's 5% year-over-year revenue growth in Q1 is an underwhelming result for a business operating in the hot artificial intelligence market. The company's mediocre sales growth does not bode well for its ability to eventually reach profitability. Moreover, on BigBear.ai's Q1 balance sheet, over $100 million of its $198.5 million in total liabilities is debt. Total Q1 assets stood at $396.3 million.

By contrast, SoundHound's sales growth is strong, and its balance sheet is healthy. Adding to this, the company's CFO, Nitesh Sharan, stated, "We remain committed to our path to profitability and ... expect to achieve adjusted EBITDA profitability by the end of 2025."

For these reasons, SoundHound is the better AI investment for the long term. But because its stock's valuation is elevated, you may want to wait for the share price to drop before deciding to buy.

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Robert Izquierdo has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends Austal and Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.