The hot artificial intelligence sector saw several AI-centric companies sprout up over the past few years. Among them are SoundHound AI (NASDAQ: SOUN), which went public in 2022, and C3.ai (NYSE: AI), which executed its IPO toward the end of 2020.
SoundHound has developed a voice-activated AI that understands human speech with uncanny precision. C3.ai built an enterprise platform encompassing both turnkey and custom AI software for organizations. This pair of AI specialists is positioned to benefit as the AI industry grows from $184 billion in 2024 to $826 billion by 2030.
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But is SoundHound or C3.ai the better choice to invest in the AI market? The answer requires taking a closer look at each company.
SoundHound aspires to make technology easy for consumers to use. That’s why the company focuses on voice-activated AI, a natural way of engaging with tech. Its AI is embedded into a variety of consumer devices, such as in cars, televisions, and at drive-thrus to automate taking restaurant orders. Customers include Stellantis, Walmart-owned Vizio, and Chipotle Mexican Grill.
The next evolution of SoundHound’s tech involves voice-enabled commerce in cars, set to launch this year. The new feature allows drivers to order food through SoundHound’s AI agent, which also assesses a convenient pick-up location.
The company wrapped up 2024 with no debt and $84.7 million in sales. This represented 85% year-over-year revenue growth. SoundHound expects its sales success to extend into 2025. The company forecast revenue to come in between $157 million and $177 million this year. That means SoundHound could repeat or exceed the 85% sales growth seen in 2024.
Although revenue is rising, the company isn’t profitable. It exited 2024 with a net loss of $350.7 million. On an encouraging note, management believes SoundHound will attain profitability on an adjusted EBITDA basis in 2025. The company ended 2024 with an adjusted EBITDA loss of $61.9 million.
While SoundHound’s voice-enabled AI is about simplifying consumer interactions with technology, C3.ai’s platform is about solving complex organizational challenges. Examples include using AI to help financial institutions identify money laundering, and utility companies to proactively catch equipment issues.
The company also used its AI to deliver a portion of the results for its fiscal third quarter, ended Jan. 31. The AI walked through some Q3 highlights, such as closing agreements with the U.S. Air Force and Navy. This was the first time AI participated on an earnings call, according to C3.ai.
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The company’s offerings brought in customers such as the U.S. Department of Defense, ExxonMobil, and the New York Power Authority. In addition, C3.ai built a network of partners to help with selling its solutions, which includes tech luminaries Microsoft and Amazon.
This approach propelled C3.ai’s fiscal Q3 revenue to $98.8 million, a 26% year-over-year increase. The company anticipates closing out fiscal 2025 with revenue between $383.9 million to $393.9 million. That would be solid growth from fiscal 2024’s $310.6 million.
But like SoundHound, C3.ai is unprofitable. The company ended fiscal Q3 with a net loss of $80.2 million, up from a net loss of $72.6 million in the previous fiscal year.
Making a choice to invest in SoundHound or C3.ai is not easy. Each company shows different strengths in its respective area within the artificial intelligence market, making either one a compelling AI investment.
And although SoundHound and C3.ai aren’t profitable, fast-growing tech companies commonly sacrifice profits in favor of business expansion. The strong year-over-year sales growth exhibited by both companies is a sign the strategy is paying off.
One investment consideration is stock valuation. Here’s a look at the price-to-sales (P/S) ratio for both companies, a commonly used metric that measures how much investors are willing to pay for every dollar of revenue.
Data by YCharts.
SoundHound’s P/S multiple was sky-high around the start of 2025, but has since dropped. Even so, it remains far higher than C3.ai’s, indicating C3.ai is the better value.
However, one factor to weigh is C3.ai’s dependence on partnerships. The company has limited influence on partner performance. If partners deliver weak sales or decide to leave, C3.ai’s revenue can take a hit. For example, its joint venture with energy giant Baker Hughes expires at the end of April, and at the time of this writing, a renewal has yet to emerge.
The uncertainty around C3.ai’s partner network is one reason SoundHound wins out as the better AI investment at this time. Moreover, SoundHound demonstrated fiscal prudence by eliminating debt, and by striving for adjusted EBITDA profitability by the end of this year, the company shows movement toward an eventual positive bottom line.
For these reasons, SoundHound looks like the more desirable AI investment for the long term. That said, since SoundHound’s price-to-sales ratio is elevated, look for its share price to drop before deciding to buy.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Robert Izquierdo has positions in Amazon, C3.ai, Chipotle Mexican Grill, Microsoft, SoundHound AI, and Walmart. The Motley Fool has positions in and recommends Amazon, Chipotle Mexican Grill, Microsoft, and Walmart. The Motley Fool recommends C3.ai and Stellantis and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
Better Artificial Intelligence (AI) Stock: SoundHound AI vs. C3.ai was originally published by The Motley Fool
