Investors willing to dive into the artificial intelligence market must start looking beyond Nvidia (NASDAQ:NVDA). Now is the time to make the right move and invest in stocks that have the potential to become the next Nvidia. Two AI stocks, SoundHound AI (NASDAQ: SOUN) and BigBear.ai Holdings (NASDAQ:BBAI) with a market cap lower than $10 billion, are attracting investor interest and could become one of the biggest AI stocks to own.
While none of these companies are as big as Nvidia, comparing small companies based on their performance can give an idea about their future. We dive deep into both the stocks and pick one for long-term gains.
Key points in the article:
- SoundHound AI and BigBear.ai are two popular AI plays.
- Both the stocks have shown solid growth over the past year but only one is worth betting on.
- If you are looking to find the next Nvidia before anyone else does, get your hands on the brand-new “The Next NVIDIA” report. It has a stock with 10x upside potential.
SoundHound AI
SoundHound AI has a market capitalization of $4 billion and the company aims to become a leader in the AI voice segment. It focuses on the auto and restaurant industry segment. The future is AI and companies are investing in voice search to increase the efficiency of conversational interactions. The technology helps identify the user intent while they are talking and SoundHound has already carved a niche in the industry. It sells the solutions through subscriptions and manages to keep the cost low. This helps with the margins.
As of writing, the stock is exchanging hands for $10.82 and is up 92% in the year and 137% over the past six months. It went from $4.56 in September 2024 to $10.82 today. However, the stock is trading below the 52-week high of $24.
It purchased Amelia, a company that runs an AI conversational platform that is focused on helping businesses with employee onboarding and customer service. This allows it to enter multiple industries and grab a larger market share. SoundHound has several opportunities to lead the market and is slowly growing its presence across different industries.
It has also seen solid revenue growth with a 101% revenue jump in the fourth quarter. The full-year revenue saw an 85% year-over-year jump. One solid reason to like SoundHound is the strong cash balance and no debt. It ended 2024 with a cash balance of $200 million which it can invest in the business.
Management also raised revenue guidance for 2025 and is now expecting revenue between $157 million to $177 million. Wall Street analysts are bullish on the stock.
BigBear.ai
BigBear.ai is known to cater to the defense industry and it generates the majority of its revenue from the Federal government. The company offers logistics, supply chain solutions, cybersecurity, automation, and data collection services. Besides the Federal Government, it also has customers in logistics, life sciences, and the manufacturing industry.
Trading at $5.16, the stock is up 19% in the year and 258% over the past six months. It has a market cap of $1.30 billion and the stock hasn’t been able to hit $13 in the past five years. In the third quarter, it reported a revenue of $41.5 million, up 22% year-over-year and a gross margin of 25.9%. The company isn’t profitable and has reported a loss of $12.2 million. It is set to report fourth-quarter results on March 6.
The acquisition of Pangiam has helped the company report strong revenue momentum. This acquisition will help BigBear.ai improve its services and the company to build the most comprehensive AI portfolio in the industry. The company also won a contract with the Department of Defense and it helped the stock move higher.
The government will use BigBear.ai’s Virtual Anticipation Network to optimize decisions. This can be seen as a strong approval from the government and could open new opportunities for the business. It also won a Navy contract a few days before this announcement.
I think BigBear.ai is heavily dependent on government contracts and it could take many years to achieve the success that Palantir Technologies (NYSE:PLTR) did. The stock could be a speculative play and might plummet if the fourth-quarter results do not impress investors.
The verdict
SoundHound is a better AI stock in the current market. It has reported impressive fundamentals and the growth potential is massive as compared to BigBear.ai. It is also present across multiple industries instead of being restricted to one like BigBear.ai is. I like the business model and believe that it has the potential to keep expanding throughout 2025. I thinkSoundHound is a millionaire maker stock if you have the patience to hold on to it.
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