The U.S. equity market has faced significant volatility in 2025, as investors navigate rising geopolitical tensions and changes in economic policies. A number of artificial intelligence (AI) stocks have experienced substantial declines, as capital shifts towards more defensive sectors like energy and consumer staples. As a result, many AI stocks have undergone dramatic valuation compressions.

However, this situation may present a unique opportunity for long-term investors to acquire high-quality AI stocks at attractive prices. The demand for AI infrastructure continues to rise, with businesses increasing their investments in training and inference workloads.

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AI Stocks Trading at Discounts

SoundHound AI (NASDAQ: SOUN) and C3.ai (NYSE: AI) are notable examples that are trading well below their all-time highs—SoundHound by 62% and C3.ai by an impressive 88%. Both companies demonstrate robust fundamentals that make them attractive options at this juncture.

SoundHound AI’s Market Position

As a leading player in voice AI, SoundHound AI offers an extensive range of conversational AI solutions. Utilizing its proprietary Polaris multimodal foundation model, the company ensures real-time speech processing with low latency and high accuracy even in noisy settings. The model supports nearly 30 languages, facilitating its entry into international markets.

The company’s strategic acquisitions—like SYNQ3, Allset, and Amelia—have created various cross-selling opportunities. The recent rollout of the latest version of the Amelia AI platform showcases SoundHound AI’s advancements in agentic AI capabilities. Powered by the proprietary Agentic Plus framework, clients can develop enterprise-ready AI agents capable of executing complex tasks autonomously.

Additionally, SoundHound is rapidly advancing in voice commerce, aiming to integrate conversational AI into vehicles. This would enable drivers to easily order meals through the vehicle’s infotainment system, representing a significant long-term growth potential.

Financially, SoundHound AI reported a 151% year-over-year revenue increase, reaching $29.1 million for the first quarter. The company concluded the quarter with $246 million in cash and no debt, offering considerable financial flexibility for future growth initiatives. Management anticipates revenues between $157 million and $177 million for 2025, indicating strong momentum.

Market analysts project the global voice and speech recognition sector will grow from $19.1 billion in 2025 to $81.6 billion by 2030, and conversational AI is expected to rise from $13.1 billion to $55.1 billion in the same period. This positions SoundHound to capture a significant market share.

Challenges remain for SoundHound, as it faces margin compression due to a shift in product mix from recent acquisitions, impacting near-term profitability. However, the company is actively reviewing acquired contracts to enhance profitability or exit less lucrative ones.

Currently, SoundHound trades at around 40 times sales, above its three-year average of 35.3 times. Nonetheless, with favorable industry trends, the company still appears to be a sound investment.

Insights on C3.ai

Founded in 2009, C3.ai has invested over $3 billion to develop a sophisticated enterprise software platform. With approximately 131 turnkey enterprise applications, it far exceeds the offerings of many competitors that still depend on custom development.

Unlike its peers, C3.ai focuses on using its patented C3 Agentic AI orchestration platform to address key enterprise challenges, including hallucinations, unauthorized data transfers, managing multimodal data, and cybersecurity risks.

A significant boost occurred in November 2024 when C3.ai expanded its partnership with Microsoft, aimed at enhancing the adoption of its enterprise AI applications on the Azure cloud platform. By the end of Q3 in fiscal 2025 (ending January 2025), C3.ai had engaged in over Azure-related engagements, signing 28 new agreements across nine industries—a staggering 460% increase quarter-over-quarter. The average sales cycle has also shortened by nearly 20%.

Through Microsoft’s global sales infrastructure, C3.ai’s qualified sales pipeline has grown by 244% year-over-year, targeting 621 potential customer accounts by Q3’s end.

Moreover, C3.ai is fortifying its partnership with Amazon Web Services and has established a significant collaboration with McKinsey QuantumBlack. Given that 71% of the agreements in Q3 were facilitated through channel partners, the importance of these collaborations is evident.

Looking ahead, analysts predict that the global enterprise application market will nearly double from $295.5 billion in 2025 to over $550 billion by 2034, positioning C3.ai to benefit significantly from this growth trajectory.

C3.ai’s recent financial outcomes are positive, showcasing a 26% year-over-year increase in revenue and a notable improvement in free cash flow. At the end of Q3, the company had $724.3 million in cash and no debt, providing a solid financial foundation for future expansion. Analysts forecast a 25% increase in revenue for fiscal 2025.

Despite these gains, challenges exist, notably with the upcoming expiration of the Baker Hughes reseller agreement in June 2025, which represents a vital revenue source. However, C3.ai has already inked advantageous contracts with other firms. The operating loss of $23.1 million in Q3 was better than anticipated due to improved cost management strategies.