Better AI Stock: SoundHound AI vs. BigBear.ai - Nasdaq

The Motley Fool's Leo Sun analyzes two AI stocks - SoundHound AI and BigBear.ai - comparing their growth potential and investment merits.

Both companies went public through SPAC mergers and saw their stock prices quadruple over the past year. SoundHound AI develops voice recognition technology for companies like Chipotle and Mastercard, while BigBear.ai creates data analysis modules for edge networks and government contracts. Despite impressive growth rates, both stocks carry high valuations that may not be sustainable in the current AI-hyped market.

• SoundHound AI shows stronger fundamentals with 85% revenue growth in 2024, though margins have declined due to acquisitions
• BigBear.ai struggles with flat revenue growth but is building a substantial government contract backlog under new leadership
• Both stocks trade at premium valuations - SoundHound at 28x projected 2027 sales and BigBear.ai at 17x
• The author favors SoundHound AI due to faster growth, fewer competitors, and better margins, but recommends caution given current valuations