Artificial intelligence remains one of the most compelling long-term investment themes, but the path to sustained shareholder returns is rarely linear. SoundHound AI (SOUN Quick QuoteSOUN - Free Report) and C3.ai (AI Quick QuoteAI - Free Report) are two pure-play AI companies that have captured investor attention with distinct approaches—one focused on conversational and voice AI, the other on enterprise-scale AI applications. Both operate within the Zacks Computers – IT Services industry and are riding the broader AI adoption wave, yet their execution and financial trajectories differ meaningfully.

SoundHound has positioned itself as a leader in voice-enabled, agentic AI across automotive, restaurants, financial services, and IoT. C3.ai, meanwhile, offers a comprehensive enterprise AI platform serving industries such as federal, manufacturing, energy and healthcare. With both stocks under pressure over the past six months and the AI narrative evolving from experimentation to monetization, now is an opportune time to compare their fundamentals.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

Six-Month Market Performance Snapshot: SOUN vs AI

Both stocks have significantly lagged the broader market. Over the past six months, SoundHound and C3.ai have plunged 39.4% and 37.5%, respectively. This compares unfavorably with the Zacks Computers – IT Services industry, down 18.6%, and stands in sharp contrast to the broader Zacks Computer and Technology sector, up 10.5%, and the S&P 500, up 9%.

The magnitude of underperformance suggests investor skepticism toward high-beta, loss-making AI names amid a more selective market environment.

6-Month Price Performance

Image Source: Zacks Investment Research

Valuation Perspective: Premium vs. Discount

On a forward 12-month price-to-sales basis, SoundHound trades at 13.26X, roughly in line with the industry average of 13.29X. C3.ai trades at 4.59X, reflecting a steep discount to peers.

The valuation gap reflects divergent growth profiles. SoundHound is growing revenue at a significantly faster clip, while C3.ai faces near-term revenue contraction. In that context, SoundHound’s premium appears growth-driven, whereas C3.ai’s discount reflects investor caution about slowing demand and persistent losses.

Image Source: Zacks Investment Research

The Case for SoundHound Stock

SoundHound’s most recent reported quarter underscores its growth momentum. In the third quarter of 2025, the company delivered record revenues of $42 million, up 68% year over year. Management also raised its full-year outlook and highlighted $269 million in cash, giving it financial flexibility to invest in product development and expansion.

On the earnings call, management emphasized that enterprise AI adoption is accelerating and that SoundHound’s deployments now span millions of endpoints across diversified industries. The company’s Polaris speech foundation model and Amelia 7 agentic AI platform are central to its strategy, enabling real-time, multimodal and multi-agent orchestration capabilities. This technical depth is reinforced in its investor materials, which highlight a $140 billion-plus total addressable market and a fully integrated, proprietary voice stack across 25 languages.

Strategically, SoundHound is expanding voice commerce into vehicles and connected devices. At CES 2026, it unveiled agentic AI capabilities that allow drivers to order food, make reservations, pay for parking and book tickets using voice. Partnerships with Parkopedia for in-vehicle parking payments, OpenTable for reservations and TomTom for multi-agent navigation illustrate a clear monetization path around transactional voice AI.

However, despite strong top-line growth, SoundHound continues to post losses, and the Zacks Consensus Estimate for 2026 loss per share is widening slightly to 6 cents from 5 cents over the past 60 days. That said, the projected 2026 loss is still narrower than the prior year’s expected 13-cent loss, and revenues are expected to grow 38.3% in 2026. Execution, cost discipline and scaling margins will be critical to justify its premium valuation.

The Case for C3.ai Stock

C3.ai offers a different AI exposure, centered on enterprise and government-grade applications. In the fiscal second quarter of 2026, the company reported total revenues of $75.1 million, with subscription revenue accounting for $70.2 million, or 93% of total revenue. Subscription-heavy revenue provides greater visibility and recurring revenue quality.

The quarter also showed improving commercial traction. Bookings increased 49% sequentially, and federal bookings grew 89% year over year. Management highlighted strong federal momentum, with total bookings across federal, defense and aerospace up 89% year over year and representing 45% of total bookings. This underscores C3.ai’s positioning as a beneficiary of the shift toward commercial off-the-shelf AI solutions in government agencies.

Partner leverage is another key strength. In the fiscal second quarter, 89% of total bookings were driven through the partner ecosystem, including Microsoft and AWS alliances that are expanding pipeline and joint deal activity. The company also launched C3 AI Agentic Process Automation, aiming to embed AI agents into enterprise workflows.

Still, challenges are evident. Revenue growth remains uneven, and guidance for fiscal 2026 implies year-over-year revenue contraction at the midpoint. Profitability is also distant, with non-GAAP operating losses guided in the $180.5–$210.5 million range for fiscal 2026. The Zacks Consensus Estimate now project fiscal 2026 loss of $1.21 per share, slightly wider than 60 days ago, and a 23.2% decline in revenues. These trends raise concerns about execution consistency despite strong federal traction.

In short, SoundHound’s revisions suggest short-term margin pressure amid expansion, while C3.ai’s revisions point to a tougher demand environment.

Which AI Stock Has Better Upside?

Both companies operate in promising AI segments, and both remain unprofitable. However, the direction of growth matters. SoundHound is demonstrating strong revenue acceleration, expanding partnerships across automotive and voice commerce, and narrowing expected losses year over year. C3.ai, a Zacks Rank #4 (Sell) company, offers federal momentum and a strong cash balance, but faces revenue contraction and deeper projected losses. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Given SoundHound’s higher growth trajectory, expanding monetization ecosystem and relatively stable industry-aligned valuation, it appears to hold better upside potential at this stage. For seeking exposure to scalable, agentic AI platforms with tangible revenue growth, SoundHound, which carries a Zacks Rank #3 (Hold), currently stands out as the more compelling albeit still high-risk AI play.