Artificial Intelligence Stocks Comparison: SoundHound AI versus BigBear.ai - which one is better?
In a significant shift in the tech industry, SoundHound and BigBear.ai, two prominent companies, have shown contrasting results in their second quarter performances.
SoundHound's Impressive Growth
SoundHound, an AI company known for its voice recognition technology, has seen a remarkable surge in its revenue. The company's Q2 revenue reached an all-time high of $42.7 million, marking a 217% year-over-year increase. This impressive growth is a testament to the popularity of SoundHound's voice AI solutions, which are finding traction across various industries such as automotive and consumer electronics.
Despite a significant increase in operating expenses, skyrocketing 241% to $120.7 million, SoundHound aims to reach adjusted EBITDA profitability, demonstrating a commitment towards becoming a profitable business. The company exited Q2 with an operating loss of $78.1 million, a 255% increase from 2024's loss of $22 million. However, SoundHound had zero debt and cash and equivalents of $230.3 million, surpassing total Q2 liabilities of $219.7 million.
BigBear.ai's Challenging Period
On the other hand, BigBear.ai, a company primarily focused on national security and infrastructure, has faced a tough quarter. The company's Q2 sales fell 18% year over year to $32.5 million, and its Q2 operating loss totaled $90.3 million, a significant increase from $16.7 million in the previous year. This steep increase is largely due to a goodwill impairment charge of $70.6 million.
BigBear.ai's primary business revolves around contracts with the U.S. government, making it vulnerable to federal government spending cuts. As a result, the company is currently not profitable and has reduced its 2025 revenue outlook to a range of $125 to $140 million, down from an original forecast of $160 to $180 million. The company recently signed an agreement with businesses in the United Arab Emirates, marking the beginning of its international expansion.
Investment Analysis
For investors seeking a high-growth opportunity, SoundHound appears to be the better choice. The company's revenue growth, market position, financial performance, valuation, and market trend all point towards its potential for continued growth. However, BigBear.ai offers a more attractive valuation and a steady role in defense and national security, which could provide stable returns for investors seeking a less volatile option.
The choice between the two depends on whether the investor prioritizes growth potential or stability. It is suggested to wait for a drop in SoundHound's stock price before considering an investment, as its sales multiple is on an upswing. Meanwhile, Artificial intelligence (AI) darling Nvidia's shares are up 35% at the time of writing, and AMD's stock jumped more than 50% in 2025 through Aug. 13.
[1] BigBear.ai Q2 2025 Earnings Release [2] SoundHound Q2 2025 Earnings Release [3] TechCrunch: SoundHound vs BigBear.ai: A Comparative Analysis [4] Forbes: The Rise of SoundHound: An Independent Alternative to Big Tech's Voice Platforms [5] CNBC: Analysts Weigh In: SoundHound vs BigBear.ai - A Growth vs Stability Debate
- Despite the increase in operating expenses, SoundHound's significant growth in revenue, aiming for adjusted EBITDA profitability, and its cash reserves points towards potential continued growth in the stock-market, making it an appealing choice for investors seeking high-growth opportunities.
- BigBear.ai's decline in Q2 sales, increased operating loss, and reduced revenue outlook indicate a challenging period for the company, which might be a less volatile option for investors prioritizing stability over growth potential.
- As both SoundHound and BigBear.ai are making headlines in the finance world, investing in either of the AI-focused companies involves careful analysis, balancing growth potential with the stability offered by BigBear.ai's focus on national security and infrastructure.
- The current trend in technology and finance, with Nvidia's and AMD's shares performing exceptionally well, suggests that it may be wise for investors to closely monitor SoundHound's stock-market performance and consider an investment when its share price drops.
