Two fairly small artificial intelligence (AI) stocks that have come up on the radars of retail investors in the past couple of years are BigBear.ai (BBAI -3.79%) and SoundHound AI (SOUN -1.63%).
BigBear.ai is a data analytics company that has secured multiple contracts with government agencies. Often bullish investors compare to it the much larger Palantir Technologies, although BigBear.ai still has a long way to go in proving that it's on the same track.
SoundHound AI is a voice AI company that has been expanding into different industries as a way to be less dependent on the automotive sector. It experienced explosive growth in its most recent quarter. And previously, chipmaking giant Nvidia invested in the business.
Both of these stocks make for intriguing AI investments, and I'll look at which one is the better buy today.
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The case for BigBear.ai
BigBear.ai is the smaller of these two AI stocks, with a market cap of around $2.6 billion. The company has a strong backlog of $380 million, which is a great indication that there is ample demand for its services. It has a close relationship with the U.S. government, which can position it for some excellent long-term opportunities.
CEO Kevin McAleenan said in the company's second-quarter earnings release he sees "tremendous opportunities ... coming from the One Big Beautiful Bill, particularly in the Department of Homeland Security, and several of which are uniquely aligned to our core capabilities."
While there has been volatility in the company's recent results (sales totaling $32.5 million were down 18% for the June-ended quarter), the longer-term picture may be a far more promising one for BigBear.ai as it capitalizes on more opportunities involving the government.
Its operations are also well funded with BigBear.ai's cash and cash equivalents balance as of the end of the quarter totaling $390.8 million, which can give it a lot of runway when you consider that it has burned through just $10.5 million from its day-to-day operating activities during the past six months.
The case for SoundHound AI
SoundHound AI is a voice AI company that has a much more diverse customer base after acquiring Amelia AI last year. Prior to that, the big concern was its exposure to the automotive sector. But now it has opened up significantly more potential. The company estimates that the total addressable market for voice AI products and services is a whopping $140 billion, and by being in more industries, it's in a much better position to take advantage of that potential.
The acquisition of Amelia also resulted in a big improvement on its top line, with the new business helping boost SoundHound's revenue to $42.7 million for the period ended June 30 -- more than triple the $13.5 million it reported in the prior-year period. The company is also eyeing some incredible growth opportunities ahead. CFO Nitesh Sharan said in the company's Q2 release, "We are moving with speed to capture the explosion we're seeing in the voice and conversational AI industry, where customers across sectors are realizing the tremendous value they can achieve by adopting our market-leading solutions."
Shares of SoundHound AI are down 15% thus far in 2025, but the stock has been picking up steam in recent weeks. With some tremendous growth prospects in AI and a lot of runway, growth investors may be captivated with the potential that SoundHound possesses.
The stock I'd go with today: BigBear.ai
Both of these stocks are risky investments to consider, but BigBear.ai stands out as the better option today.
SoundHound burned through $43.7 million over its past six months and its cash and cash equivalents totaled $230.3 million, which suggests that there's a greater risk of dilution with that stock. I'm also wary of investing in companies such as SoundHound that focus heavily on acquisitions to grow their operations, as that can make it difficult to dissect just how well they are growing organically.
Meanwhile, government contracts can result in more stability for a business such as BigBear.ai down the road. As a result of all the above factors, it gets the slight edge.
