Are you on the hunt for a big investment opportunity in this rapidly growing field of artificial intelligence (AI)?
With the rapid advancement in AI technology and its increasing integration into various industries, choosing the right AI stock for your portfolio is difficult.
According to the forecast, the AI sector will grow over the next several years, from $136 billion to $827 billion in 2023 and 2030, respectively.
But with so many AI companies vying to get a spot for attention, choosing the right stock can feel like panning for fool’s gold. Two companies that have captured investor interest are SoundHound AI (SOUN) and C3.ai (AI). Both offer innovative AI solutions, but they cater to different market segments. So, which one is the better investment for you?
Here, you will learn about the primary differences between stock SOUN and C3.ai, which will analyze their areas of expertise, financial health, and future potential to help you make an informed decision.
Introduction to SOUN and C3.ai
SoundHound AI (SOUN)
SoundHound AI, Inc. is renowned for its advanced voice AI technology. The company primarily focuses on enabling humans to interact with technology using natural voice commands. SoundHound’s Houndify platform provides developers with a comprehensive solution to integrate voice AI into their products, offering robust language understanding and contextual search capabilities.
C3.ai
C3.ai, on the other hand, specializes in enterprise AI software. Their core product is a suite of tools that allows companies to develop, deploy, and manage large-scale AI applications. C3.ai provides the underlying infrastructure enabling businesses to leverage AI’s power across various departments, from supply chain optimization to predictive maintenance.
A report by Grand View Research predicts the global enterprise AI market will be estimated at USD 196.63 billion in 2023 and grow at a CAGR of 36.6% from 2024 to 2030, highlighting the vast potential C3.ai is tapping into.
Key Difference Between SOUN vs. C3.ai
While both SoundHound AI (SOUN) and C3.ai (AI) operate in AI and have dominated market gains, they cater to distinct segments with unique strengths and challenges.
Here’s a breakdown of their fundamental differences across various aspects:
Market Performance and Financials
With a 128% increase in value this year, SoundHound AI’s 12-month return is now positive at 97%. Conversely, C3.ai’s stock has lost 35% and been down 6.5% in the past year.
Even with rapid revenue growth, C3.ai and SoundHound AI are not profitable. SoundHound experienced a $33 million net loss in Q1, and C3.ai’s fiscal Q4 net loss was $72.9 million.
In the long run, SoundHound hopes to turn a profit. Nitesh Sharan, our chief officer, said, “We still expect to cross $100 million in revenue and deliver adjusted earnings before interest, taxes, depreciation, and amortization financial (EBITDA) profitability in 2025.”
For C3.ai, this isn’t the case. Over the last three fiscal years, the company’s net losses have climbed yearly, from $192.1 million in fiscal 2022 to $279.7 million in fiscal 2024.
Product Offerings and Technological Edge
With a focus on voice AI technology, SOUN provides companies with a platform to incorporate voice-powered experiences. This covers interactive menus, smart speakers, and voice assistants built into apps. However, enterprise AI software is the main focus of C3.ai.
Both businesses showcase state-of-the-art technology in their specialized fields. SOUN’s voice AI platform uses deep learning methods to provide highly accurate speech recognition and natural language processing. C3.ai offers an adaptable and scalable platform for enterprise artificial intelligence (AI) applications using machine learning and artificial general intelligence (AGI) principles.
Overall, SOUN possesses a strong foothold in voice AI technology, while C3.ai leads enterprise-focused AI software development.
Growth Prospects and Future Potential
SoundHound AI stock has a strong growth prospect but appears to be overpriced for many people. The organization’s total revenue is still less than $20 million per quarter despite a fantastic 73% increase in sales reported in Q1 2024. In the $3.8 billion speech AI market, this implies that its market share is still relatively tiny.
Going forward, C3.ai anticipates revenue growth will increase, reaching over 23% in the fiscal year 2025. The company intends to keep funding development to take the lead in the industry and create a successful enterprise software business.
Both companies possess significant growth potential in their chosen markets. SOUN rides the wave of consumer-facing voice technology, while C3.ai focuses on the broader enterprise AI application landscape.
Risks and Considerations
Short-term hype rather than long-term fundamentals might fuel SOUN’s recent stock surge. Dependence on a single technology (voice AI) poses a diversification risk. C3.ai faces stiff competition from established tech giants with massive resources. Their widening net losses raise concerns about future profitability.
Overall saturation in the voice-powered device market could affect stock SOUN’s growth. The pace of enterprise AI adoption is unpredictable and could impact C3.ai’s revenue stream.
Both companies present investment risks. Investors in SOUN need to be aware of potential hype and market saturation risks. Investors in C3.ai should consider the intense competition and the uncertainty surrounding their profitability trajectory.
Key Considerations for Investors
Here are the key considerations that one has to consider before investing in these AI Stocks-
- Risk Tolerance: Investors who want to take on greater risk in exchange for better growth may be drawn to SoundHound. People who want a longer, more reliable play should consider C3.ai.
- Investment Horizon: SoundHound’s stock performance may be enticing if you search for rapid gains. The promise of C3.ai in enterprise AI may appeal more to people with longer time horizons.
- Diversification: Investing in both companies can offer a balanced exposure to different segments of the AI market.
Conclusion
The AI landscape is evolving rapidly, and new players and technologies are emerging constantly. Both SoundHound AI and C3.ai are well-positioned to capitalize on the AI revolution. Still, their success will depend on their ability to carry out their strategies, adapt to market changes, and deliver tangible results to shareholders.
As an investor, you must stay informed about the latest developments in the AI industry. Monitor both companies’ financial performance, product launches, and strategic partnerships. The AI gold rush is far from over, and there might still be undiscovered nuggets waiting to be unearthed.
