Better artificial intelligence stock: SoundHound AI vs. BigBear.ai

SoundHound AI vs. BigBear.ai: Which AI Stock Is the Better Long-Term Play?

The artificial intelligence (AI) industry is currently experiencing robust growth, driving significant interest and performance in related stocks. Despite a backdrop of macroeconomic volatility, companies leveraging AI technology are achieving impressive milestones. Two such businesses captivating investor attention are SoundHound AI (SOUN) and BigBear.ai (BBAI).

Over the past year, both stocks have seen dramatic price movements, reflecting the excitement surrounding the AI sector. However, looking beyond stock price surges to the underlying business fundamentals is crucial for long-term investing success. Let's dive into each company to determine which presents a more compelling opportunity.

SoundHound AI: Rapid Expansion and Strong Fundamentals

SoundHound AI began its journey in music recognition but has evolved into a sophisticated voice AI provider capable of understanding human speech across 25 languages. Its technology has found applications ranging from in-car voice commands, adopted by major automakers like Stellantis, to expanding into new verticals like restaurants, healthcare, and finance through strategic acquisitions made in 2024.

This expansion strategy has paid off significantly. SoundHound reported record first-quarter 2025 revenue of $29.1 million, marking a remarkable 151% increase year over year. Beyond impressive top-line growth, the company exited Q1 with a strong balance sheet, boasting no debt and a substantial cash position of $245.8 million, which comfortably exceeded its total liabilities of $190.5 million.

Management is optimistic about the future, noting the largest pipeline in the company's history and an expanding total addressable market (TAM). This confidence is reflected in their 2025 full-year revenue forecast of $157 million to $177 million, a significant leap from $84.7 million in 2024. Furthermore, SoundHound is actively pursuing profitability, with a stated commitment to achieving adjusted EBITDA profitability by the end of 2025. These factors demonstrate a business that is not only growing rapidly but also building a solid financial foundation.

BigBear.ai: National Security Focus with Slower Growth

BigBear.ai, on the other hand, focuses its artificial intelligence capabilities on solving critical issues within national security and critical infrastructure. With a new CEO, Kevin McAleenan, who previously served as acting secretary of the U.S. Department of Homeland Security, the company has strategically aligned its AI applications with government and large-scale institutional needs. Its technology has been adopted by notable entities such as the U.S. Department of Defense, major airports like London Heathrow and Dallas Fort Worth, and the shipbuilder Austal.

This customer base helped BigBear.ai achieve Q1 2025 revenue of $34.8 million, representing a modest 5% increase year over year. The company projects full-year 2025 revenue between $160 million and $180 million, a slight increase from $158.2 million in 2024. While the sector is hot, BigBear.ai's revenue growth appears somewhat underwhelming in comparison to peers like SoundHound.

Financially, BigBear.ai faces challenges. The company is not currently profitable, reporting an operating loss of $21.2 million in Q1 2025, driven by increased operating expenses. Its balance sheet also carries over $100 million in debt out of $198.5 million in total liabilities, contrasting with its $396.3 million in total assets. The slower growth rate combined with unprofitability raises questions about its path to sustainable financial health.

Valuation and The Better Investment Choice

When comparing growth stocks that may not yet be profitable, the price-to-sales (P/S) ratio is a useful metric. It indicates how much investors are willing to pay for each dollar of revenue. SoundHound AI's P/S ratio remains significantly higher than BigBear.ai's, suggesting SoundHound's stock is currently trading at a premium valuation. While SoundHound's multiple has decreased, it's still higher than even AI leader Nvidia's P/S ratio of 24, indicating potential overvaluation.

However, valuation is only one piece of the puzzle. SoundHound's explosive revenue growth (151% YoY vs. BigBear.ai's 5% YoY) and its strong balance sheet with zero debt stand in stark contrast to BigBear.ai's more subdued growth and notable debt load. SoundHound's clear commitment and expected timeline for achieving adjusted EBITDA profitability by the end of 2025 also provide a more defined path to financial sustainability compared to BigBear.ai.

Based on the combination of superior growth, a healthier balance sheet, and a clearer path to profitability, SoundHound AI appears to be the better AI investment for the long term. Its aggressive expansion into diverse industries and robust financial health offer a more compelling growth story despite its current elevated valuation. For investors interested in SoundHound, the actionable advice is to consider waiting for a potential pullback in the share price to build a position at a more attractive valuation, thereby mitigating some of the risk associated with its high P/S ratio. BigBear.ai, while operating in a critical sector, needs to demonstrate significantly accelerated growth and a clearer path to profitability to become a more attractive investment option.