2 Super AI Stocks Down 62% and 88% You'll Regret Not Buying on the Dip in 2025

The U.S. equity market has been on a roller-coaster ride in 2025, as investors remain wary about rising geopolitical pressures and shifting economic policies. Many artificial intelligence (AI) stocks, in particular, have struggled as capital has increasingly moved to defensive sectors, such as energy and consumer staples. Hence, these stocks have seen dramatic compression in valuations.

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For long-term investors, this phase now presents a rare opportunity to scoop up high-quality AI stocks at compelling prices. Demand for AI infrastructure remains strong, with companies increasing their spending on training and inference workloads.

Image source: Getty Images.

SoundHound AI (NASDAQ: SOUN) and C3.ai (NYSE: AI) are two notable examples. Both are trading at huge discounts from their all-time highs -- SoundHound by 62% and C3.ai by a staggering 88% -- despite strong fundamentals. Here's why these two are smart picks now.

SoundHound AI

A prominent voice AI player, SoundHound AI has built a comprehensive suite of conversational AI solutions that are significantly superior to those offered by competitors. The company leverages its proprietary Polaris multimodal foundation model to support real-time speech processing with low latency and high accuracy even in noisy environments. The model is also multilingual, supporting conversations in nearly 30 languages. These capabilities have enabled the company to penetrate international markets more easily.

SoundHound's strategic acquisitions, including SYNQ3, Allset, and Amelia, have opened up multiple cross-selling opportunities. The recent launch of the latest version of the Amelia AI platform, Amelia 7.0, demonstrates SoundHound AI's strength in agentic AI capabilities. This platform, powered by a proprietary Agentic Plus framework, enables clients to build multiple enterprise-ready AI agents with world-class voice AI capabilities. These agents can perform a range of complex tasks, including thinking, reasoning, and executing actions without human intervention.

SoundHound is also making rapid inroads into voice commerce. The company is working on leveraging its relationships with restaurants and automotive original equipment manufacturers to integrate conversational AI into vehicles. This feature will let drivers order food seamlessly from the vehicle's infotainment system simply by speaking while driving. This can prove to be a significant catalyst in the long run.

SoundHound AI boasted strong financials in the first quarter, with revenue surging 151% year over year to $29.1 million. The company also ended the quarter with $246 million in cash and no debt, providing it with the financial flexibility to invest in organic and inorganic growth initiatives in the coming years. Finally, management projected revenue of $157 million to $177 million for 2025, implying strong growth momentum.

Analysts expect the global voice and speech recognition market to grow from $19.1 billion in 2025 to $81.6 billion by 2030, while conversational AI is estimated to grow from $13.1 billion to $55.1 billion in the same time frame. SoundHound is well positioned to capture a meaningful share of this market.

However, all is not rosy for the company. SoundHound is experiencing margin compression due to shifts in product mix resulting from recent acquisitions. This has pressured near-term profitability. But SoundHound is working to resolve this challenge by reviewing acquired contracts to improve profitability or exit those that are less profitable.

SoundHound AI is trading at about 40 times sales, which is higher than its three-year average of 35.3 times. However, considering all the powerful tailwinds, the company appears to be a smart buy, even at elevated valuations.

C3.ai

Since 2009, C3.ai has invested more than $3 billion in developing one of the most sophisticated enterprise software platforms on the market. It offers about 131 turnkey enterprise applications -- far outpacing most of its competitors, which still rely on custom application development.

C3.ai also differs from its peers in its focus on leveraging the patented C3 Agentic AI orchestration platform to solve critical enterprise challenges, including hallucinations, data exfiltration (the unauthorized transfer or theft of data from a computer or network), managing multimodal data, and addressing cybersecurity vulnerabilities.

A major catalyst came in November 2024, when C3.ai expanded its partnership with Microsoft to drive adoption of its enterprise AI application on the Azure cloud computing platform. The partnership is already proving lucrative. By the end of the third quarter of fiscal 2025 (ending January 2025), C3.ai was involved in more than Azure-related engagements, signing 28 new agreements across nine industries -- a 460% quarter-over-quarter increase. The sales cycle had also been shortened by nearly 20%.

C3.ai now has access to Microsoft's global sales infrastructure. The joint qualified sales pipeline has grown 244% year over year and was targeting 621 eligible customers accounts at the end of the third quarter.

C3.ai is also doubling down on its partnership with Amazon Web Services and has entered into a significant collaboration with McKinsey QuantumBlack. The importance of these strategic partnerships is evident, considering that 71% of the total agreements in the third quarter were delivered through the channel partners.

Analysts expect the global enterprise application market to nearly double from $295.5 billion in 2025 to over $550 billion by 2034, and C3.ai is poised to capture a significant share of this growth.

C3.ai's recent financials are also encouraging, with 26% year-over-year top-line growth and a meaningful improvement in free cash flow. The company carried $724.3 million in cash and zero debt on its balance sheet at the end of the third quarter. For fiscal 2025, analysts expect the company's revenue to increase by 25% year over year.

Yes, there are challenges. The upcoming expiration of the Baker Hughes reseller agreement in June 2025, a significant revenue driver, has raised eyebrows. But C3.ai has already entered into lucrative contracts with several other companies. Its third-quarter operating loss of $23.1 million was better than the company's projections due to improved cost management. Management also expects to be free-cash-flow-positive in the fourth quarter.

C3.ai is currently trading at about 8 times sales, significantly lower than the five-year average of 12.2. Hence, considering its risk-adjusted growth prospects, this appears to be a good time to initiate a position in this stock.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.