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SoundHound vs. C3.ai: Which AI Stock Has More Upside Now?
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Key Takeaways
SOUN posted 217% revenue growth in Q2 2025 and raised its full-year guidance to up to $178 million.
SOUN expanded across restaurants and automotive while diversifying clients and acquiring voice AI firms.
AI's Q1 revenue dropped 19% as leadership changes and weak sales execution delayed profitability goals.
Artificial intelligence (“AI”) has fueled impressive rallies in many tech stocks, and two notable players are SoundHound AI (SOUN - Free Report) and C3.ai (AI - Free Report) . SoundHound focuses on conversational and voice AI across industries such as restaurants, automotive, and financial services. Meanwhile, C3.ai focuses on enterprise-scale AI applications spanning defense, manufacturing, and government. Both stocks have captured significant investor attention, yet their financial trajectories and execution challenges diverge sharply.
With SoundHound reporting record quarterly growth and raising its 2025 outlook, and C3.ai undergoing leadership changes while restructuring its sales force amid revenue declines, the comparison is timely. Investors evaluating upside potential in 2025 must weigh growth momentum, execution risk, valuation, and competitive positioning.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for SoundHound Stock
SoundHound is quickly establishing itself as a disruptor in voice AI, benefiting from surging demand across industries. Its conversational AI platform has gained strong traction in restaurants, now live at more than 14,000 locations as of the second quarter of 2025, including deployments with Applebee’s, Chipotle, and Red Lobster. Automotive is another growth pillar, with major partnerships and a recent global win in China to embed voice assistants in vehicles. This broad enterprise adoption—from drive-thrus to connected cars—highlights SoundHound’s ability to capture AI spending in specialized niches.
The company has also reduced customer concentration risk, with no single client contributing more than 10% of second-quarter 2025 revenues. Strategic acquisitions, including Amelia (dialogue AI) and SYNQ3 (restaurant voice ordering), are adding tens of millions in recurring revenue and enhancing cross-selling opportunities. These moves strengthen its product suite and accelerate expansion.
Financial momentum is equally strong. Second-quarter 2025 revenues surged 217% year over year to a record $42.7 million, driving management to raise full-year guidance to $160–$178 million, nearly double 2024 revenue, with strength across automotive, restaurants, and enterprise services.
However, profitability remains under pressure. GAAP gross margin slipped to 39% in the second quarter due to lower-margin acquired contracts, though non-GAAP margin improved to 58% as integration gains took hold. Operating expenses surged—R&D up 64%, sales and marketing up 180%, and G&A up 91%—keeping adjusted EBITDA in the red with a $14.3 million loss. Management also flagged deal lumpiness, noting that large enterprise and OEM contracts could drive quarterly swings, with the third-quarter seasonality before a stronger fourth-quarter ramp. Again, investors should also weigh SoundHound’s intense competition. The company operates in a space dominated by tech giants like Amazon’s (AMZN - Free Report) Alexa, Alphabet’s (GOOGL - Free Report) Google (Assistant), and Apple’s (AAPL - Free Report) Siri, all of whom invest heavily in voice AI.
Nonetheless, the company’s balance sheet appears solid. SoundHound held roughly $230 million in cash with zero debt as of June 30, 2025, giving it ample liquidity to invest in R&D and sales expansion.
Management is focused on cost discipline and has stated plans to reach adjusted EBITDA break-even by the end of 2025, indicating that positive cash flow is on the horizon if growth continues. Overall, SoundHound has validated its bold growth strategy with tangible results, and it is leveraging a favorable market wave in conversational AI.
The Case for C3.ai Stock
C3.ai has a very different profile: it’s an established player in enterprise AI software, targeting large-scale implementations for corporations and government agencies. The company provides a broad platform of turn-key AI applications addressing use cases like predictive maintenance, supply chain optimization, fraud detection, and more. The company has already launched more than 131 pre-built enterprise AI applications, providing customers with rapid access to tested and scalable solutions.
C3.ai’s partner ecosystem is becoming one of its most important growth drivers. In the most recent quarter, 90% of the company’s closed deals were partner-led, involving major global technology players such as Microsoft (MSFT - Free Report) Azure, Amazon’s AWS, Google Cloud, and McKinsey QuantumBlack. These partnerships multiply C3.ai’s reach, effectively giving it access to tens of thousands of enterprise sales professionals worldwide.
Customer traction also highlights the strength of the technology. Expansions with major players like Nucor, Qemetica, HII, and the U.S. Army underscore the enterprise-grade nature of C3.ai’s platform. In particular, the U.S. Army’s deployment of contested logistics applications on C3’s agentic AI platform demonstrates the company’s ability to address mission-critical use cases. Management also introduced a Strategic Integrator Program, allowing OEMs and system integrators to build their own domain-specific solutions on top of the C3 platform, which could become a scalable new revenue stream.
C3.ai’s biggest hurdle is execution. In the first quarter of fiscal 2026, revenue fell 19% year over year to $70.3 million, missing estimates and marking its first post-IPO guidance miss. CEO Tom Siebel labeled the results “unacceptable,” citing weak sales execution and leadership changes. Losses widened, with a non-GAAP operating loss of $57.8 million, negative free cash flow of $34.3 million, and gross margin slipping to 52% on higher costs and limited scale. While management reaffirmed its long-term profitability goal, the weak start has delayed progress. Although the company has signed 28 initial production deployments, converting these costly early projects into recurring subscription revenue remains inconsistent, which puts pressure on margins.
Despite near-term turbulence, C3.ai maintains a solid balance sheet with $711.9 million in cash and securities, giving it flexibility to invest in growth initiatives and weather operating losses.
Share Price Performance of SOUN and AI Stocks
Over the past three months, SOUN stock has skyrocketed by approximately 52%, significantly outperforming AI’s performance, which plunged 26.9% during the same time frame.
SoundHound is currently trading 43.2% below its 52-week high of $24.98 but remains substantially above its 52-week low by 218.9%, indicating it has recovered significantly from its lowest price point over the last year. In contrast, C3.ai trades 19.3% above its 52-week low of $14.70, showing some recovery, but remains well 61.1% below its 52-week high.
Overall, SOUN demonstrates greater resilience and a wider price range recovery compared to AI.
3-Month Share Price Performance
Image Source: Zacks Investment Research
Valuation of SOUN & AI Stocks
At a $5.8 billion market cap, SoundHound’s forward 12-month price/sales (P/S) ratio is 28.95 – a rich multiple compared to traditional IT services firms, implying high expectations. As a smaller company, SoundHound must execute flawlessly to justify its valuation.
With a market cap near $2.41 billion, C3.ai stock’s forward 12-month P/S ratio is 7.52, much lower than SOUN’s.
SOUN Vs AI Stocks’ Valuation
Image Source: Zacks Investment Research
SOUN & AI’s Estimate Revision Trend
Over the past 60 days, the Zacks Consensus Estimate for SOUN’s 2025 loss per share has narrowed to 13 cents from 16 cents. The estimated figure indicates an improvement from the year-ago loss of $1.04 per share.
The Zacks Consensus Estimate for 2025 revenues implies year-over-year growth of 95.3%.
For SOUN Stock
Image Source: Zacks Investment Research
For AI stock, analysts are pessimistic about its earnings potential. Over the past seven days, the Zacks Consensus Estimate for AI’s fiscal 2026 loss per share has widened to $1.33 per share from $1.15. The estimated figure depicts a wider loss for fiscal 2026 compared with the fiscal 2025 level of 41 cents per share, as shown below.
The Zacks Consensus Estimate for fiscal 2026 revenues implies a year-over-year decline of 23.1%.
For AI Stock
Image Source: Zacks Investment Research
Which Stock Has More Upside?
Both SoundHound and C3.ai are at the forefront of the AI revolution, but their recent fundamentals paint different pictures. SoundHound is executing on its growth strategy with accelerating revenues, expanding enterprise adoption, and a strong balance sheet that supports continued innovation. Its guidance hike for 2025 underscores both near-term momentum and management’s confidence in scaling toward profitability. Despite high valuation multiples, the company’s leadership in conversational AI and diversified customer base make it a compelling growth play, with upside tied to industry tailwinds in automotive, restaurants, and enterprise voice AI.
C3.ai, on the other hand, is weighed down by execution risk and inconsistent revenue conversion from its costly initial production deployments. Revenue contraction, widened losses, and its first post-IPO guidance miss highlight the fragility of its near-term outlook. While the company has a broad enterprise platform and strong partnerships, these advantages have yet to translate into sustainable growth, and the timeline for profitability has been pushed further out.
For investors looking at AI exposure in 2025, SoundHound — a Zacks Rank #3 (Hold) company — offers accelerating fundamentals and improving operating leverage that justify holding the stock. In contrast, this Zacks Rank #4 (Sell) C3.ai’s ongoing struggles suggest limited upside and higher execution risk in the near term, making it a candidate to sell now.
Image: Bigstock
SoundHound vs. C3.ai: Which AI Stock Has More Upside Now?
Key Takeaways
Artificial intelligence (“AI”) has fueled impressive rallies in many tech stocks, and two notable players are SoundHound AI (SOUN - Free Report) and C3.ai (AI - Free Report) . SoundHound focuses on conversational and voice AI across industries such as restaurants, automotive, and financial services. Meanwhile, C3.ai focuses on enterprise-scale AI applications spanning defense, manufacturing, and government. Both stocks have captured significant investor attention, yet their financial trajectories and execution challenges diverge sharply.
With SoundHound reporting record quarterly growth and raising its 2025 outlook, and C3.ai undergoing leadership changes while restructuring its sales force amid revenue declines, the comparison is timely. Investors evaluating upside potential in 2025 must weigh growth momentum, execution risk, valuation, and competitive positioning.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for SoundHound Stock
SoundHound is quickly establishing itself as a disruptor in voice AI, benefiting from surging demand across industries. Its conversational AI platform has gained strong traction in restaurants, now live at more than 14,000 locations as of the second quarter of 2025, including deployments with Applebee’s, Chipotle, and Red Lobster. Automotive is another growth pillar, with major partnerships and a recent global win in China to embed voice assistants in vehicles. This broad enterprise adoption—from drive-thrus to connected cars—highlights SoundHound’s ability to capture AI spending in specialized niches.
The company has also reduced customer concentration risk, with no single client contributing more than 10% of second-quarter 2025 revenues. Strategic acquisitions, including Amelia (dialogue AI) and SYNQ3 (restaurant voice ordering), are adding tens of millions in recurring revenue and enhancing cross-selling opportunities. These moves strengthen its product suite and accelerate expansion.
Financial momentum is equally strong. Second-quarter 2025 revenues surged 217% year over year to a record $42.7 million, driving management to raise full-year guidance to $160–$178 million, nearly double 2024 revenue, with strength across automotive, restaurants, and enterprise services.
However, profitability remains under pressure. GAAP gross margin slipped to 39% in the second quarter due to lower-margin acquired contracts, though non-GAAP margin improved to 58% as integration gains took hold. Operating expenses surged—R&D up 64%, sales and marketing up 180%, and G&A up 91%—keeping adjusted EBITDA in the red with a $14.3 million loss. Management also flagged deal lumpiness, noting that large enterprise and OEM contracts could drive quarterly swings, with the third-quarter seasonality before a stronger fourth-quarter ramp. Again, investors should also weigh SoundHound’s intense competition. The company operates in a space dominated by tech giants like Amazon’s (AMZN - Free Report) Alexa, Alphabet’s (GOOGL - Free Report) Google (Assistant), and Apple’s (AAPL - Free Report) Siri, all of whom invest heavily in voice AI.
Nonetheless, the company’s balance sheet appears solid. SoundHound held roughly $230 million in cash with zero debt as of June 30, 2025, giving it ample liquidity to invest in R&D and sales expansion.
Management is focused on cost discipline and has stated plans to reach adjusted EBITDA break-even by the end of 2025, indicating that positive cash flow is on the horizon if growth continues. Overall, SoundHound has validated its bold growth strategy with tangible results, and it is leveraging a favorable market wave in conversational AI.
The Case for C3.ai Stock
C3.ai has a very different profile: it’s an established player in enterprise AI software, targeting large-scale implementations for corporations and government agencies. The company provides a broad platform of turn-key AI applications addressing use cases like predictive maintenance, supply chain optimization, fraud detection, and more. The company has already launched more than 131 pre-built enterprise AI applications, providing customers with rapid access to tested and scalable solutions.
C3.ai’s partner ecosystem is becoming one of its most important growth drivers. In the most recent quarter, 90% of the company’s closed deals were partner-led, involving major global technology players such as Microsoft (MSFT - Free Report) Azure, Amazon’s AWS, Google Cloud, and McKinsey QuantumBlack. These partnerships multiply C3.ai’s reach, effectively giving it access to tens of thousands of enterprise sales professionals worldwide.
Customer traction also highlights the strength of the technology. Expansions with major players like Nucor, Qemetica, HII, and the U.S. Army underscore the enterprise-grade nature of C3.ai’s platform. In particular, the U.S. Army’s deployment of contested logistics applications on C3’s agentic AI platform demonstrates the company’s ability to address mission-critical use cases. Management also introduced a Strategic Integrator Program, allowing OEMs and system integrators to build their own domain-specific solutions on top of the C3 platform, which could become a scalable new revenue stream.
C3.ai’s biggest hurdle is execution. In the first quarter of fiscal 2026, revenue fell 19% year over year to $70.3 million, missing estimates and marking its first post-IPO guidance miss. CEO Tom Siebel labeled the results “unacceptable,” citing weak sales execution and leadership changes. Losses widened, with a non-GAAP operating loss of $57.8 million, negative free cash flow of $34.3 million, and gross margin slipping to 52% on higher costs and limited scale. While management reaffirmed its long-term profitability goal, the weak start has delayed progress. Although the company has signed 28 initial production deployments, converting these costly early projects into recurring subscription revenue remains inconsistent, which puts pressure on margins.
Despite near-term turbulence, C3.ai maintains a solid balance sheet with $711.9 million in cash and securities, giving it flexibility to invest in growth initiatives and weather operating losses.
Share Price Performance of SOUN and AI Stocks
Over the past three months, SOUN stock has skyrocketed by approximately 52%, significantly outperforming AI’s performance, which plunged 26.9% during the same time frame.
SoundHound is currently trading 43.2% below its 52-week high of $24.98 but remains substantially above its 52-week low by 218.9%, indicating it has recovered significantly from its lowest price point over the last year. In contrast, C3.ai trades 19.3% above its 52-week low of $14.70, showing some recovery, but remains well 61.1% below its 52-week high.
Overall, SOUN demonstrates greater resilience and a wider price range recovery compared to AI.
3-Month Share Price Performance
Image Source: Zacks Investment Research
Valuation of SOUN & AI Stocks
At a $5.8 billion market cap, SoundHound’s forward 12-month price/sales (P/S) ratio is 28.95 – a rich multiple compared to traditional IT services firms, implying high expectations. As a smaller company, SoundHound must execute flawlessly to justify its valuation.
With a market cap near $2.41 billion, C3.ai stock’s forward 12-month P/S ratio is 7.52, much lower than SOUN’s.
SOUN Vs AI Stocks’ Valuation
Image Source: Zacks Investment Research
SOUN & AI’s Estimate Revision Trend
Over the past 60 days, the Zacks Consensus Estimate for SOUN’s 2025 loss per share has narrowed to 13 cents from 16 cents. The estimated figure indicates an improvement from the year-ago loss of $1.04 per share.
The Zacks Consensus Estimate for 2025 revenues implies year-over-year growth of 95.3%.
For SOUN Stock
Image Source: Zacks Investment Research
For AI stock, analysts are pessimistic about its earnings potential. Over the past seven days, the Zacks Consensus Estimate for AI’s fiscal 2026 loss per share has widened to $1.33 per share from $1.15. The estimated figure depicts a wider loss for fiscal 2026 compared with the fiscal 2025 level of 41 cents per share, as shown below.
The Zacks Consensus Estimate for fiscal 2026 revenues implies a year-over-year decline of 23.1%.
For AI Stock
Image Source: Zacks Investment Research
Which Stock Has More Upside?
Both SoundHound and C3.ai are at the forefront of the AI revolution, but their recent fundamentals paint different pictures. SoundHound is executing on its growth strategy with accelerating revenues, expanding enterprise adoption, and a strong balance sheet that supports continued innovation. Its guidance hike for 2025 underscores both near-term momentum and management’s confidence in scaling toward profitability. Despite high valuation multiples, the company’s leadership in conversational AI and diversified customer base make it a compelling growth play, with upside tied to industry tailwinds in automotive, restaurants, and enterprise voice AI.
C3.ai, on the other hand, is weighed down by execution risk and inconsistent revenue conversion from its costly initial production deployments. Revenue contraction, widened losses, and its first post-IPO guidance miss highlight the fragility of its near-term outlook. While the company has a broad enterprise platform and strong partnerships, these advantages have yet to translate into sustainable growth, and the timeline for profitability has been pushed further out.
For investors looking at AI exposure in 2025, SoundHound — a Zacks Rank #3 (Hold) company — offers accelerating fundamentals and improving operating leverage that justify holding the stock. In contrast, this Zacks Rank #4 (Sell) C3.ai’s ongoing struggles suggest limited upside and higher execution risk in the near term, making it a candidate to sell now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.