SoundHound AI vs C3.ai: Comparing Two Promising AI Stocks

Better Artificial Intelligence (AI) Stock: SoundHound AI vs. C3.ai

Artificial intelligence (AI) has entered the mainstream, helping to propel many tech stocks to staggering gains, most notably AI semiconductor chipmaker Nvidia. Plenty of opportunity remains to invest in the secular trend of AI, since the market is still in its infancy. Forecasts estimate the AI industry will see years of expansion, from $136 billion in 2023 to $827 billion by 2030. Two promising AI companies to consider investing in are SoundHound AI (NASDAQ: SOUN) and C3.ai (NYSE: AI) -- and not because they have AI in their names. Both are seeing strong revenue growth as customers adopt their AI products. But between the two, is one a better investment to benefit from AI's multiyear industry growth? Let's take a look at each to arrive at an answer. The case for SoundHound AI SoundHound's AI solutions center around speech recognition. Its tech is employed to answer customer service calls, process food orders at drive-thrus, and allow drivers to use voice commands in a vehicle. SoundHound has an impressive list of customers. These include restaurant chains Chipotle and Jersey Mike's, as well as automakers Hyundai and Chrysler owner Stellantis. Its voice platform can understand 25 languages. This multilingual capability is important, allowing the company to generate robust revenue from every geographic area it operates in throughout the world. For example, in the first quarter, all of SoundHound's geographic regions experienced strong year-over-year revenue increases. Data source: SoundHound AI. YOY = year-over-year. Table by author. The outsized year-over-year sales growth seen in the Americas region was due to SoundHound's acquisition of SYNQ3, a voice AI business focused on the restaurant industry. SoundHound's 73% year-over-year sales increase in Q1 represents a strong start to 2024, and this performance is expected to continue throughout the year. The company estimates 2024 full-year revenue to reach at least $65 million, a substantial jump up from 2023's $45.9 million, in part due to the SYNQ3 acquisition. Reasons to invest in C3.ai C3.ai helps customers implement artificial intelligence into their organizations through a suite of custom and pre-built AI software. This software tackles various business needs, including fraud detection for banks and energy management for utility companies. Like SoundHound, C3.ai is experiencing excellent year-over-year revenue growth thanks to customers such as Shell, Consolidated Edison, and the U.S. government. In its 2024 fiscal year, ended April 30, the company's sales increased 16% to $310.6 million, compared to the prior year's $266.8 million. C3.ai's revenue from its federal business more than doubled in fiscal 2024 versus the previous year. Government customers include the U.S. Air Force, which uses C3.ai's software to predict when its aircraft will require maintenance. Given its strong momentum in fiscal 2024, C3.ai expects its revenue growth to continue into fiscal 2025, with sales reaching at least $370 million. This would represent another year of double-digit revenue expansion. C3.ai is targeting adoption of its solutions internationally as part of its growth strategy. In fiscal 2024, $269.9 million of its $310.6 million in revenue came from North America, so the opportunity exists to increase sales in other regions. Deciding between SoundHound AI and C3.ai Despite strong revenue growth, neither SoundHound AI nor C3.ai are profitable. In Q1, SoundHound suffered a net loss of $33 million. C3.ai's fiscal Q4 net loss totaled $72.9 million. The lack of profitability isn't a concern, since it's common for fast-growing tech companies to sacrifice profits to fuel business expansion. However, ideally, you want to see losses shrinking over time. That's the case for SoundHound. Its 2023 net loss was $88.9 million, a reduction from 2022's net loss of $116.7 million. Q1 was an exception. The company's SYNQ3 acquisition caused operating expenses to increase, resulting in net losses edging up to $33 million compared to the prior year's $27.4 million. Over the long term, SoundHound foresees becoming profitable. CFO Nitesh Sharan stated, "we still expect to cross $100 million in revenue and deliver adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) profitability in 2025." The same isn't true for C3.ai. The firm's net losses have increased annually for the last three fiscal years, from $192.1 million in fiscal 2022 to $279.7 million in 2024. Another factor to consider is the assessment of Wall Street analysts. The consensus among them is a "buy" rating for SoundHound with a median share price of $8. For C3.ai, the consensus is a "hold" rating, with a $29.50 median share price. This indicates Wall Street's belief in upside for SoundHound shares, but not for C3.ai, given the stock price of each at the time of this writing. Based on SoundHound's strategic acquisition of SYNQ3, which helps it expand its business in the restaurant sector, combined with its global revenue growth and goal of achieving EBITDA profitability next year, SoundHound edges out C3.ai as the better AI investment at this time. That said, SoundHound stock is volatile, so be prepared for a roller-coaster ride in the short term if you buy shares, and keep your eye on the long haul. Should you invest $1,000 in SoundHound AI right now? Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $722,626!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Robert Izquierdo has positions in Chipotle Mexican Grill and Nvidia. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Nvidia. The Motley Fool recommends C3.ai and Stellantis. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Better Artificial Intelligence (AI) Stock: SoundHound AI vs. C3.ai

Both companies found success with their AI solutions, but one looks like the better long-term investment. Artificial intelligence (AI) has entered the mainstream, helping to propel many tech stocks to staggering gains, most notably AI semiconductor chipmaker Nvidia. Plenty of opportunity remains to invest in the secular trend of AI, since the market is still in its infancy. Forecasts estimate the AI industry will see years of expansion, from $136 billion in 2023 to $827 billion by 2030. Two promising AI companies to consider investing in are SoundHound AI (SOUN -1.40%) and C3.ai (AI -1.45%) -- and not because they have AI in their names. Both are seeing strong revenue growth as customers adopt their AI products. But between the two, is one a better investment to benefit from AI's multiyear industry growth? Let's take a look at each to arrive at an answer. The case for SoundHound AI SoundHound's AI solutions center around speech recognition. Its tech is employed to answer customer service calls, process food orders at drive-thrus, and allow drivers to use voice commands in a vehicle. SoundHound has an impressive list of customers. These include restaurant chains Chipotle and Jersey Mike's, as well as automakers Hyundai and Chrysler owner Stellantis. Its voice platform can understand 25 languages. This multilingual capability is important, allowing the company to generate robust revenue from every geographic area it operates in throughout the world. For example, in the first quarter, all of SoundHound's geographic regions experienced strong year-over-year revenue increases. Data source: SoundHound AI. YOY = year-over-year. Table by author. The outsized year-over-year sales growth seen in the Americas region was due to SoundHound's acquisition of SYNQ3, a voice AI business focused on the restaurant industry. SoundHound's 73% year-over-year sales increase in Q1 represents a strong start to 2024, and this performance is expected to continue throughout the year. The company estimates 2024 full-year revenue to reach at least $65 million, a substantial jump up from 2023's $45.9 million, in part due to the SYNQ3 acquisition. Reasons to invest in C3.ai C3.ai helps customers implement artificial intelligence into their organizations through a suite of custom and pre-built AI software. This software tackles various business needs, including fraud detection for banks and energy management for utility companies. Like SoundHound, C3.ai is experiencing excellent year-over-year revenue growth thanks to customers such as Shell, Consolidated Edison, and the U.S. government. In its 2024 fiscal year, ended April 30, the company's sales increased 16% to $310.6 million, compared to the prior year's $266.8 million. C3.ai's revenue from its federal business more than doubled in fiscal 2024 versus the previous year. Government customers include the U.S. Air Force, which uses C3.ai's software to predict when its aircraft will require maintenance. Given its strong momentum in fiscal 2024, C3.ai expects its revenue growth to continue into fiscal 2025, with sales reaching at least $370 million. This would represent another year of double-digit revenue expansion. C3.ai is targeting adoption of its solutions internationally as part of its growth strategy. In fiscal 2024, $269.9 million of its $310.6 million in revenue came from North America, so the opportunity exists to increase sales in other regions. Deciding between SoundHound AI and C3.ai Despite strong revenue growth, neither SoundHound AI nor C3.ai are profitable. In Q1, SoundHound suffered a net loss of $33 million. C3.ai's fiscal Q4 net loss totaled $72.9 million. The lack of profitability isn't a concern, since it's common for fast-growing tech companies to sacrifice profits to fuel business expansion. However, ideally, you want to see losses shrinking over time. That's the case for SoundHound. Its 2023 net loss was $88.9 million, a reduction from 2022's net loss of $116.7 million. Q1 was an exception. The company's SYNQ3 acquisition caused operating expenses to increase, resulting in net losses edging up to $33 million compared to the prior year's $27.4 million. Over the long term, SoundHound foresees becoming profitable. CFO Nitesh Sharan stated, "we still expect to cross $100 million in revenue and deliver adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) profitability in 2025." The same isn't true for C3.ai. The firm's net losses have increased annually for the last three fiscal years, from $192.1 million in fiscal 2022 to $279.7 million in 2024. Another factor to consider is the assessment of Wall Street analysts. The consensus among them is a "buy" rating for SoundHound with a median share price of $8. For C3.ai, the consensus is a "hold" rating, with a $29.50 median share price. This indicates Wall Street's belief in upside for SoundHound shares, but not for C3.ai, given the stock price of each at the time of this writing. Based on SoundHound's strategic acquisition of SYNQ3, which helps it expand its business in the restaurant sector, combined with its global revenue growth and goal of achieving EBITDA profitability next year, SoundHound edges out C3.ai as the better AI investment at this time. That said, SoundHound stock is volatile, so be prepared for a roller-coaster ride in the short term if you buy shares, and keep your eye on the long haul.

2 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire | The Motley Fool

Buying these AI stocks as a part of a diversified portfolio could turn out to be a profitable move in the long run. Buying and holding solid companies for a long time is a tested investment philosophy that has helped investors enjoy significant returns. This strategy not only allows investors to capitalize on secular growth trends but also enables them to benefit from the power of compounding. For instance, an investment of $5,000 in shares of Nvidia a decade ago is now worth a whopping $1.37 million. The graphics card specialist's outstanding returns can be attributed to its impressive growth over the past decade, which has been driven by the demand for its chips from the gaming and data center segments. And now, artificial intelligence (AI) is turning out to be another solid catalyst for Nvidia. Nvidia, however, is not the only company that is benefiting from AI adoption. Micron Technology (MU -2.72%) and SoundHound AI (SOUN -1.40%) have also received a nice lift from AI proliferation. Of course, expecting these companies to turn $5,000 into a million dollars in a decade (like Nvidia) may seem a bit far-fetched. However, buying and holding these AI stocks as a part of a diversified portfolio may help investors achieve their goal of becoming millionaires. Let's look at the reasons why. The booming adoption of AI is creating the need for more computing power, while also driving an increase in cloud storage demand. Precedence Research estimates that the AI-focused storage market could generate annual revenue of $217 billion in 2033 as compared to $23 billion last year, growing at a healthy annual rate of 25% during this period. Similarly, smartphones, personal computers (PCs), and servers are now being equipped with faster and bigger dynamic random access memory (DRAM) chips to tackle AI workloads. Market researcher TrendForce estimates that the average DRAM content in smartphones and notebooks could increase by 14% and 12% this year, respectively. Meanwhile, the DRAM content in servers is expected to jump to 17.3% this year following a 13.6% increase in 2023. More importantly, the DRAM content in these niches is also expected to increase in 2025 as AI adoption improves. Micron Technology is one of the best ways to play this secular growth trend, and the company is already witnessing a significant surge in its top and bottom lines thanks to AI. Micron's revenue increased 50% in the first nine months of the current fiscal year to $17.3 billion. Meanwhile, its loss per share dropped to $0.10 from $4.03 per share in the same period last year. Micron is expected to finish the current fiscal year with $25 billion in revenue, which would be an increase of 61% from the previous year. Additionally, the company is expected to post an adjusted profit of $1.22 per share as compared to a loss of $4.45 per share in the previous year. As the following chart indicates, both metrics are expected to head higher over the next couple of fiscal years. There is a good chance that Micron will be able to sustain such healthy growth for a much longer period considering the impressive growth opportunity in the memory market thanks to catalysts such as AI. We have already seen that AI-driven storage demand could generate annual revenue of more than $200 billion after a decade. Similarly, the revenue from sales of high-bandwidth memory that's used in AI chips is expected to jump to $38 billion in 2029 from $14 billion this year. Meanwhile, the overall market for memory chips is forecast to hit $321 billion in annual revenue in 2030. Micron stock could deliver robust long-term upside and be an ideal pick for those looking to capitalize on the fast-growing adoption of AI technology. SoundHound AI has been one of the hottest stocks on the market this year, clocking gains of 175% as of this writing. Of course, shares of the company that provides voice AI solutions to customers have witnessed a lot of volatility in 2024, but there is no denying the fact that its offerings are finding impressive traction among customers. The company's revenue in the first quarter of 2024 increased 73% year over year to $11.6 million. The full-year revenue outlook ranges between $65 million and $77 million, the midpoint of which would translate into a 54% jump over the prior year. For comparison, SoundHound delivered $46 million in revenue in 2023, which was an increase of 47% over the prior year. Even better, SoundHound expects its top-line acceleration to continue in 2025, forecasting revenue of more than $100 million next year. The company estimates that its total addressable market is worth a whopping $140 billion. If that's indeed the case, SoundHound AI could be at the beginning of a massive growth curve. The company is building a nice customer base across diverse industries that could help it tap this outstanding opportunity. SoundHound currently has customers in the automotive, restaurant, entertainment, television, and customer service markets. Looking ahead, it aims to expand into the retail, financial, healthcare, education, and contact center markets. SoundHound AI's solutions are being deployed by the likes of Stellantis in the automotive space, while it has a host of customers such as Applebee's, Church's Chicken, and other quick-service restaurants. Thanks to the growing customer base and the huge addressable market that SoundHound is tapping, the company has been able to construct a healthy revenue pipeline. This is evident from its cumulative subscriptions and bookings backlog of $682 million, a number that grew a solid 80% year over year. According to SoundHound, this metric consists of committed customer contracts as well as the potential revenue that the company thinks it can achieve from its existing customer base where it is "the leading or exclusive provider." There is a good chance that this metric could continue improving in the long run as SoundHound taps more of its addressable market. All this makes SoundHound AI a solid AI stock to buy and hold for the long run as its bright prospects could play a solid role in helping investors become millionaires.

2 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire

Buying and holding solid companies for a long time is a tested investment philosophy that has helped investors enjoy significant returns. This strategy not only allows investors to capitalize on secular growth trends but also enables them to benefit from the power of compounding. For instance, an investment of $5,000 in shares of Nvidia a decade ago is now worth a whopping $1.37 million. The graphics card specialist's outstanding returns can be attributed to its impressive growth over the past decade, which has been driven by the demand for its chips from the gaming and data center segments. And now, artificial intelligence (AI) is turning out to be another solid catalyst for Nvidia. Nvidia, however, is not the only company that is benefiting from AI adoption. Micron Technology (NASDAQ: MU) and SoundHound AI (NASDAQ: SOUN) have also received a nice lift from AI proliferation. Of course, expecting these companies to turn $5,000 into a million dollars in a decade (like Nvidia) may seem a bit far-fetched. However, buying and holding these AI stocks as a part of a diversified portfolio may help investors achieve their goal of becoming millionaires. The booming adoption of AI is creating the need for more computing power, while also driving an increase in cloud storage demand. Precedence Research estimates that the AI-focused storage market could generate annual revenue of $217 billion in 2033 as compared to $23 billion last year, growing at a healthy annual rate of 25% during this period. Similarly, smartphones, personal computers (PCs), and servers are now being equipped with faster and bigger dynamic random access memory (DRAM) chips to tackle AI workloads. Market researcher TrendForce estimates that the average DRAM content in smartphones and notebooks could increase by 14% and 12% this year, respectively. Meanwhile, the DRAM content in servers is expected to jump to 17.3% this year following a 13.6% increase in 2023. More importantly, the DRAM content in these niches is also expected to increase in 2025 as AI adoption improves. Micron Technology is one of the best ways to play this secular growth trend, and the company is already witnessing a significant surge in its top and bottom lines thanks to AI. Micron's revenue increased 50% in the first nine months of the current fiscal year to $17.3 billion. Meanwhile, its loss per share dropped to $0.10 from $4.03 per share in the same period last year. Micron is expected to finish the current fiscal year with $25 billion in revenue, which would be an increase of 61% from the previous year. Additionally, the company is expected to post an adjusted profit of $1.22 per share as compared to a loss of $4.45 per share in the previous year. As the following chart indicates, both metrics are expected to head higher over the next couple of fiscal years. MU Revenue Estimates for Next Fiscal Year data by YCharts There is a good chance that Micron will be able to sustain such healthy growth for a much longer period considering the impressive growth opportunity in the memory market thanks to catalysts such as AI. We have already seen that AI-driven storage demand could generate annual revenue of more than $200 billion after a decade. Similarly, the revenue from sales of high-bandwidth memory that's used in AI chips is expected to jump to $38 billion in 2029 from $14 billion this year. Meanwhile, the overall market for memory chips is forecast to hit $321 billion in annual revenue in 2030. Micron stock could deliver robust long-term upside and be an ideal pick for those looking to capitalize on the fast-growing adoption of AI technology. 2. SoundHound AI SoundHound AI has been one of the hottest stocks on the market this year, clocking gains of 175% as of this writing. Of course, shares of the company that provides voice AI solutions to customers have witnessed a lot of volatility in 2024, but there is no denying the fact that its offerings are finding impressive traction among customers. The company's revenue in the first quarter of 2024 increased 73% year over year to $11.6 million. The full-year revenue outlook ranges between $65 million and $77 million, the midpoint of which would translate into a 54% jump over the prior year. For comparison, SoundHound delivered $46 million in revenue in 2023, which was an increase of 47% over the prior year. Even better, SoundHound expects its top-line acceleration to continue in 2025, forecasting revenue of more than $100 million next year. The company estimates that its total addressable market is worth a whopping $140 billion. If that's indeed the case, SoundHound AI could be at the beginning of a massive growth curve. The company is building a nice customer base across diverse industries that could help it tap this outstanding opportunity. SoundHound currently has customers in the automotive, restaurant, entertainment, television, and customer service markets. Looking ahead, it aims to expand into the retail, financial, healthcare, education, and contact center markets. SoundHound AI's solutions are being deployed by the likes of Stellantis in the automotive space, while it has a host of customers such as Applebee's, Church's Chicken, and other quick-service restaurants. Thanks to the growing customer base and the huge addressable market that SoundHound is tapping, the company has been able to construct a healthy revenue pipeline. This is evident from its cumulative subscriptions and bookings backlog of $682 million, a number that grew a solid 80% year over year. According to SoundHound, this metric consists of committed customer contracts as well as the potential revenue that the company thinks it can achieve from its existing customer base where it is "the leading or exclusive provider." There is a good chance that this metric could continue improving in the long run as SoundHound taps more of its addressable market. All this makes SoundHound AI a solid AI stock to buy and hold for the long run as its bright prospects could play a solid role in helping investors become millionaires. Should you invest $1,000 in SoundHound AI right now? Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $741,989!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.