Understanding the Comparison: SoundHound AI vs. BigBear.ai
In the rapidly evolving field of artificial intelligence (AI), investors are keenly observing companies like SoundHound AI (SOUN) and BigBear.ai (BBAI). Both organizations represent two unique approaches within the AI sector, each with its distinct growth trajectory and market potential. The question remains: which of these AI stocks presents the better investment opportunity?
SoundHound AI: Accelerating Growth
SoundHound AI is primarily known for its voice and audio recognition technology. The company’s app can identify songs from a few seconds of audio or even from hummed tunes. However, its main revenue stream originates from Houndify, a developer platform that allows other businesses to create their own AI-powered voice recognition systems. Notable clients include major automotive manufacturers like Stellantis, well-known fast-food chains such as Chipotle, and financial giants like Mastercard.
The growth numbers for SoundHound AI are impressive. In 2023, revenue surged by 47%, followed by an impressive 85% increase in 2024, and a staggering 187% year-over-year growth in the first half of 2025. This growth can be attributed partly to strategic acquisitions, including an AI restaurant services provider and other tech firms focused on enhancing its capabilities.
Despite this rapid growth, SoundHound’s cost structure has seen an adjustment, leading to a decline in gross margin from 76.2% in 2023 to 55.3% in early 2025. The company remains unprofitable according to generally accepted accounting principles (GAAP), raising questions about the sustainability of its business model. Nevertheless, optimistic projections suggest that as economies of scale are achieved, SoundHound’s margins could improve.
Analysts anticipate a robust compound annual growth rate (CAGR) of nearly 47%, projecting revenue to reach approximately $267 million by 2027. However, with a market cap of $7.4 billion, the current valuation is significantly high, making investors wary of potential corrections.
BigBear.ai: A Different Path
On the other side, BigBear.ai takes a more analytical approach. The company offers three primary AI modules—Observe, Orient, and Dominate—that specialize in data ingestion, trend identification, and future outcome predictions, respectively. BigBear.ai operates primarily in edge networks, facilitating data flow between servers and end-users. This company also collaborates with larger data mining entities like Palantir.
However, BigBear.ai has faced challenges. Its revenue growth has been stagnant, with a mere 2% increase in 2024 after a flat performance in 2023. The company has experienced setbacks due to the bankruptcy of its top customer, Virgin Orbit, and rising competition within the sector. Despite these hurdles, BigBear.ai has managed to expand its gross margin to 28.6% in 2024.
Recently, BigBear.ai has made strategic moves, such as acquiring a biometric identity technology firm, enhancing its potential to secure government contracts. Although analysts expect revenue growth of 14% in 2026 and 6% by 2027 as it taps into its growing backlog, concerns remain as the company is still projected to be unprofitable on a GAAP basis.
The Verdict: Which Stock to Invest In?
When comparing these two AI stocks, SoundHound AI appears to have a clearer competitive advantage. Its growth rate outpaces BigBear.ai, and it operates in a sector with rising demand for AI-powered voice recognition technologies. Although both companies are facing the challenges of high valuations, SoundHound’s expanding client base and product offerings position it more favorably in the evolving AI landscape.
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