As artificial intelligence (AI) continues to transform various sectors, investors are increasingly focusing on niche AI companies with strong growth potential. Two notable players—SoundHound AI (SOUN) and BigBear.ai (BBAI)—have emerged as key contenders in the AI landscape. Although differing in size, both companies maintain a strong emphasis on their AI specialties: SoundHound excels in voice and conversational AI, while BigBear.ai specializes in data-driven “decision intelligence” solutions for enterprises and government. Remarkably, SoundHound’s market capitalization soared past $3 billion in 2024, establishing it as a mid-cap firm, while BigBear.ai remains a small-cap player with a market value around $743 million.

SoundHound’s stock experienced an incredible 836% increase in 2024 due to rapid revenue growth, while BigBear.ai also gained nearly 108%. However, both stocks have recently faced sharp declines, with SoundHound shares down 59% in 2025, slightly more than BigBear.ai’s decline of approximately 42.2%.

SOUN & BBAI Stock Performances

Image Source: Zacks Investment Research

Given the recent performance, investors may wonder which of these AI plays presents a better opportunity for recovery. Here, we will evaluate their fundamentals, growth outlook, and associated risks.

The Case for SOUN Stock

SoundHound AI has established itself as a leader in voice-enabled AI technologies, with its platform gaining traction across various industries. Its core platform allows businesses to integrate conversational voice assistants into products ranging from automobiles to customer service applications. As a result, SoundHound witnessed a remarkable 85% increase in revenues in 2024, reaching $84.7 million. The fourth quarter saw revenues climb to $34.5 million, a staggering 101% year-over-year growth, prompting management to revise their outlook for 2025 upwards.

A significant achievement for SoundHound has been its effort to diversify its client base, reducing reliance on a small number of customers. In 2024, its largest client’s contribution to revenues decreased to just over 14% from nearly 50% in 2023. The total reliance on its top five clients dropped from over 90% to approximately one-third, demonstrating substantial progress in diversifying revenue streams.

SoundHound’s client roster includes major players across various sectors. It powers voice AI systems in automotive infotainment, drive-through restaurant kiosks, and banking applications. Notably, the company collaborates with over 30% of the top 20 quick-service restaurant chains and 70% of the leading global financial institutions. Recently, SoundHound expanded its automotive partnerships, securing deals with six additional Stellantis brands for in-car voice assistants. Additionally, the company announced a new partnership with Tencent Holdings’ (TCEHY) Intelligent Mobility unit to provide its voice technology for in-car assistance in China. To enhance its offerings, SoundHound has further integrated NVIDIA AI Enterprise tools into its platform.

Despite this technological edge and sales growth, SoundHound continues to face challenges. Like many emerging tech firms, it is burning cash and contending with intensive competition. Major players in the “Magnificent Seven,” including Amazon (AMZN), Alphabet (GOOGL), and Apple (AAPL), are all actively investing in similar conversational AI capabilities, which may create pressures for independent firms. SoundHound aims to distinguish itself by offering an independent platform without ceding control to larger tech companies.

Moreover, if economic conditions deteriorate or spending slows, clients in sectors such as automotive and retail could reduce investment in new technologies. Management has pointed out that economic factors like tariffs affecting auto manufacturers (e.g., Stellantis) could impact the demand for SoundHound’s services. To maintain investor confidence, the company needs to sustain its growth momentum and move toward profitability.

The Case for BBAI Stock

BigBear.ai, a smaller yet notable company, has established a significant niche in AI services for the government and enterprise sectors. It positions itself as a specialized AI provider with a focus on decision intelligence, leveraging AI and machine learning to assist organizations in making more informed data-driven decisions. Its solutions are utilized in crucial sectors such as defense, intelligence, cybersecurity, and logistics.

This specialized focus has led to notable contract wins and a growing backlog of orders. By the end of 2024, BigBear’s backlog reached $418 million, a substantial increase from $168 million the previous year. This growth offers the company considerable revenue visibility moving forward. Additionally, BigBear has begun securing larger, longer-term contracts, reflecting increasing client trust; for instance, the U.S. Department of Defense awarded BigBear.ai a 3.5-year, $13.2 million sole-source contract to support a Joint Chiefs of Staff initiative in March 2025.

Furthermore, BigBear.ai has established partnerships with industry giants like Amazon and Palantir Technologies Inc. (PLTR), underscoring the validity of its technology. Amazon Web Services has integrated BigBear’s ProModel simulation software into its lineup to enhance AI-driven logistics. Similarly, Palantir is collaborating with BigBear to strengthen AI capabilities targeted at defense and intelligence applications.

Despite promising prospects, BigBear.ai faces significant near-term hurdles. The company reported an alarming net loss of $108 million in the fourth quarter of 2024, partially attributed to a $93 million non-cash charge linked to a new convertible note. Operating expenses, particularly selling, general, and administrative costs, rose sharply to $22.2 million from $18.2 million the previous year, partly due to integration costs associated with recent acquisitions, including Pangiam. Consequently, adjusted EBITDA fell from $3.7 million the prior year to only $2 million in the fourth quarter.

Management anticipates continued negative adjusted EBITDA in 2025 as investments in operations persist. Consequently, BigBear is still a ways off from achieving profitability, which introduces a level of risk amid fluctuating market conditions.

Moreover, the company’s heavy reliance on U.S. government contracts poses risks, especially given budget uncertainties exacerbated by stopgap funding measures in Congress. These uncertainties could lead to delays in contract awards and spending. Additionally, the presence of convertible notes maturing in 2029, associated with the substantial derivative loss, raises concerns about the company’s capital structure. Poor management might dilute shareholders or strain finances further.