Artificial intelligence continues to reshape enterprise software, creating significant opportunities for companies that can successfully commercialize AI. SoundHound AI SOUN and C3.ai AI are two pure-play AI companies targeting enterprise customers through different approaches—one focused on conversational and agentic AI, the other on enterprise AI applications. Both companies recently reported quarterly results, which highlighted evolving growth strategies and execution priorities.
Let's dive deep and closely compare the fundamentals of the two stocks to determine which one is the better investment now.
The Case for SoundHound Stock
SoundHound continues to establish itself as one of the fastest-growing conversational AI companies. First-quarter 2026 revenues increased 52% year over year to a record $44.2 million, while its core automotive and IoT AI business grew 88% excluding acquisitions. Management reaffirmed its full-year revenue guidance of $225-$260 million, reflecting continued demand across automotive, restaurants, financial services, healthcare and enterprise customer service.
The company's most significant growth catalyst is its planned acquisition of LivePerson. The transaction will significantly expand SoundHound's enterprise customer base by adding hundreds of long-standing customers across banking, telecommunications, healthcare and retail. Management expects the combined platform to create a long-term revenue opportunity of roughly $500 million through cross-selling voice AI, digital messaging and omnichannel customer engagement solutions.
Innovation remains another competitive advantage. During the quarter, SoundHound introduced OASYS, a self-learning agentic AI platform that can automatically create, orchestrate and improve AI agents while leveraging the company's proprietary speech foundation models. By reducing reliance on third-party large language models, management expects lower operating costs, stronger customer outcomes and improved scalability over time. The company also continues expanding its enterprise pipeline across multiple industries, supporting long-term revenue visibility.
Despite these positives, meaningful risks remain. SoundHound continues to generate sizable operating and adjusted EBITDA losses as it aggressively invests in AI infrastructure and product development. The planned LivePerson acquisition introduces integration and execution risk, while realizing anticipated cost and revenue synergies could take longer than expected. Continued investment in proprietary AI models may also keep margins under pressure before the business reaches meaningful operating leverage.
The Case for C3.ai Stock
C3.ai remains one of the best-known enterprise AI software providers, serving governments and large commercial customers through its AI application platform. However, the fourth quarter of fiscal 2026 results illustrated that the company is still navigating a challenging turnaround.
Quarterly revenues declined to $51.6 million, while full-year revenues decreased to $250.3 million. Subscription revenues continued to represent 94% of quarterly sales, underscoring the recurring nature of its business model. Nevertheless, management guided fiscal 2027 revenues to $210-$240 million, indicating another year of top-line pressure.
Management has responded aggressively. Founder Thomas Siebel returned as chief executive officer and implemented a broad restructuring that reduced headcount by approximately 35%, simplified operations and targeted roughly $135 million in annual operating cost savings. The company is also reorganizing its sales organization, customer success teams and product development while embedding agentic AI across internal operations to improve productivity and execution.
Financial strength remains C3.ai's biggest advantage. The company exited the quarter with more than $670 million in cash, cash equivalents and marketable securities, providing substantial flexibility to fund its turnaround without requiring additional capital. The restructuring is also beginning to improve earnings expectations, even though revenue growth remains under pressure.
The biggest challenge is restoring sustainable growth. Revenue guidance remains weak, enterprise sales execution has disappointed and management must demonstrate that organizational changes can translate into stronger customer wins and expanding deployments.
Relative Stock Performance Favors SoundHound
AI stocks have experienced sharp volatility in 2026. SoundHound shares have plunged 37.4% year to date, outperforming both C3.ai, whose stock has plummeted 64.6%, and the Zacks Computers – IT Services industry's 35.5% decline.
SOUN vs AI Price Performance (YTD)
Image Source: Zacks Investment Research
Among comparable AI peers, Palantir Technologies PLTR has lost 25.6% while BigBear.ai Holdings BBAI has plunged 41.2% year to date. Although none of these companies have kept pace with the broader Zacks Computer and Technology sector's 36.4% gain or the S&P 500's 23.3% advance, SoundHound's relatively better share-price performance suggests investors continue to assign greater confidence to its long-term growth strategy than to C3.ai's ongoing turnaround.
Valuation Reflects Diverging Expectations
On a forward 12-month price-to-sales (P/S) basis, SoundHound trades at 10.63X, slightly below the Zacks Computers – IT Services industry average of 11.05X, while C3.ai trades at 5.66X.
SOUN vs AI Valuation (P/E F12M)
Image Source: Zacks Investment Research
Among AI peers, Palantir commands a premium multiple of 27.88X, reflecting its superior execution, profitability and market leadership. BigBear.ai trades at 10.62X, almost identical to SoundHound's valuation.
Although C3.ai appears considerably cheaper, its discounted multiple largely reflects slowing revenue growth and execution uncertainty. SoundHound's higher valuation appears supported by stronger revenue momentum and multiple growth catalysts, including OASYS and the planned LivePerson acquisition.
Earnings Estimates Tell Different Stories
Estimate revisions currently favor C3.ai, while revenue expectations favor SoundHound.
Over the past 60 days, the Zacks Consensus Estimate for SoundHound's 2026 loss has widened to 18 cents per share from 9 cents. Analysts nevertheless expect revenues to grow 38% in 2026, followed by another 15.9% growth in 2027.
SOUN Estimate Revision
Image Source: Zacks Investment Research
Meanwhile, the Zacks Consensus Estimate for C3.ai's fiscal 2027 loss has narrowed to 82 cents per share from 92 cents over the past 30 days, reflecting expected benefits from its restructuring efforts. Fiscal 2027 revenues are projected to decline 11.5% before returning to 8.7% growth in fiscal 2028.
C3.ai Estimate Revision
Image Source: Zacks Investment Research
Which AI Stock Is the Better Buy?
Both companies offer differentiated exposure to enterprise AI, but with distinctly different risk profiles. SoundHound is delivering much stronger revenue growth, expanding its enterprise footprint and introducing innovative agentic AI capabilities that could support long-term value creation. However, the company is also pursuing an aggressive expansion strategy that carries considerable execution risk. Persistent operating losses, elevated cash requirements to fund AI development, uncertainty surrounding the successful integration of LivePerson and the absence of a clear timeline to sustainable profitability increase the near-term investment risk.
C3.ai, meanwhile, faces slower revenue growth but has already taken decisive restructuring actions, maintains a fortress balance sheet and is showing early signs of improving earnings expectations. While its turnaround remains a work in progress, the company's stronger financial position and lower operational risk make it a more attractive investment today. C3.ai currently carries a Zacks Rank #3 (Hold) and SoundHound carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).