Trying to beat the market with $20K—should it go into SoundHound or BigBear.ai?

Investing

Published: February 27, 2025 9:03 am

Last Updated: February 27, 2025 9:04 am

About 30 years ago, the dot-com boom showcased the internet’s potential to transform business—a revolutionary idea at the time. Countless companies rode the hype without solid revenue, leaving investors burned when the bubble burst. Today, in 2025, the internet has matured into a reliable tool for research, and AI is the new frontier. With $20,000 to invest, can you beat the market by choosing between two AI players, SoundHound AI and BigBear.ai? Let’s explore.

Key Points

With AI the hottest new sector, AI stocks with under $10 billion net caps are becoming scarcer.
SoundHound AI and BigBear.ai are addressing completely separate areas of the potential AI market, and both have significant upside at their current valuations.
Rather than choosing one or the other, some investors are opting to split funds for a stake in each company, given that they don’t compete with one another.
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SoundHound AI

Soundhound AI (NASDAQ: SOUN) specializes in voice AI, powering applications in cars, restaurants, and beyond. Founded by CEO Keyvan Mohajer and Stanford classmates, the company aimed to outdo Star Trek’s computer.

Their 2006 music recognition app, Midomi, became SoundHound in 2009, identifying songs from radio, street performances, or even a hum. Downloads soared from 2 million in 2010 to 100 million by 2012, reaching an estimated 300 million users by late 2024

In 2015, SoundHound partnered with Hyundai for in-car music recognition and launched its Houndify platform with Speech-to-Meaning® and Deep Meaning Understanding® technologies. Automakers like Mercedes-Benz, Honda, and European brands such as Peugeot and Citroën adopted it for hands-free voice control. Recent deals with Lucid, Kia, and Rekor Systems integrate voice AI with vehicle recognition, while CES 2025 unveiled a voice-commerce platform for in-car takeout orders.

Beyond cars, SoundHound entered the drive-thru scene in 2023, speeding up orders for chains like Chipotle, White Castle, and Five Guys. Its 2024 acquisition of Synq3 added 10,000 restaurant clients. The summer purchase of Amelia opened doors to finance, healthcare, and retail, bolstered by Polaris, a proprietary AI trained on billions of conversations for superior speech understanding.

At $10-$11 per share, SoundHound is a bargain from its 2024 peak of $24, hit after Nvidia sold its 1.7 million shares—a minor $30 million stake for the $3.4 trillion giant. Analysts see its autonomous vehicle niche as small compared to Nvidia’s broader focus. Still, upsides shine: an 89% revenue jump last quarter, client diversification (top client’s revenue share fell from 72% to 12%), a $136 million cash buffer, and 2025 guidance raised to $175 million. With 59%-75% margins from its subscription model, SoundHound offers recurring revenue potential.

BigBear.ai

Authentication by facial recognition concept. Biometric. Security system. — BigBear.ai’s flagship products are for biometric ID security, especially facial recognition.

BigBear.ai (NYSE: BBAI) excels in biometric security, notably facial recognition, with roots in defense since 1988. Its tools echo Mission: Impossible tech, but they’re real—used by the U.S. Department of Defense. Pangiam blends facial recognition with anomaly detection, Trueface matches faces in seconds, veriScan secures airports with TSA, and Dartmouth flags threats in 3D baggage scans.

Beyond security, BigBear offers AI analytics for defense via ARCAS and Observe, cybersecurity tools like SpaceCREST and Troy, plus solutions for manufacturing and healthcare. Its government-heavy client base contrasts with SoundHound’s commercial diversity.

BigBear’s reliance on government contracts brings higher costs and risks. Q1 revenues tanked after a U.S. Air Force contract ended and client Virgin Orbit went bankrupt. Losses ballooned from -$37 million to -$149 million over three quarters, with flat revenue. It’s often compared to Palantir, though smaller, and faces potential cuts from government mismanagement fallout. Positives include a new DoD contract for its VANE prototype, a 22% revenue rise in Q3 2024, and a forecast bumped to $180 million. Expansion into healthcare and cybersecurity, plus a defense-friendly Trump administration, could boost its niche in biometric security.

Weighing Investing Upsides and Downsides

Given how little SoundHound AI and BigBear.ai have in common, one can either choose to invest in both, or if one doesn’t appeal more than the other, a prospective investor can flip a coin.

SoundHound and BigBear.ai differ sharply. SoundHound’s growth hinges on scalable, recurring revenue across cars, restaurants, and more, with strong margins and cash flow. BigBear leans on government deals, offering stability but higher risks and slimmer profitability. Both went public via SPAC—SoundHound in 2022, BigBear in 2021—and neither is profitable yet.

For $20,000, SoundHound tempts with a lower entry price ($10-$11 vs. BigBear’s unspecified but likely higher cost) and broader market appeal. A $20,000 stake could buy roughly 1,800-2,000 shares, betting on its diversified growth.

BigBear, with its defense focus, suits risk-takers eyeing government spending, though losses and volatility loom larger. Splitting the pot—say, $10,000 each—hedges your bet across AI’s commercial and security frontiers. Dig deeper: SoundHound’s momentum feels steadier, but BigBear’s DoD ties could pay off if contracts align. Your call depends on whether you chase growth or stability.