Better Artificial Intelligence Stock: C3.ai vs. SoundHound AI

Artificial intelligence (AI) stocks remain attractive investments despite the current macroeconomic turmoil exasperated by President Trump's mercurial trade policies. Wall Street analyst Dan Ives explained why, stating, "In 25 years covering tech, I've never seen a bigger theme than the AI revolution."

Two newcomers to this hot industry are C3.ai (NYSE: AI) and SoundHound AI (NASDAQ: SOUN). The former went public in 2020, and the latter in 2022.

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SoundHound and C3.ai's businesses are already going strong, and as new public companies, they are just getting started. But if you had to choose one, which is the superior AI investment for the long haul? Examining both companies can help to identify the better choice.

Image source: Getty Images.

A look at SoundHound AI

SoundHound has built an impressive business around AI capable of understanding human speech. Its tech is used by Stellantis and other automakers to provide drivers with voice-activated commands inside cars, as well as by restaurants, such as White Castle, to handle phone and drive-thru orders.

Adoption of the company's AI-powered voice platform is growing. In the first quarter, SoundHound activated over 1,000 new restaurant locations, the first time it's achieved so many in a single quarter.

As customer adoption has grown, so has revenue. Q1 sales hit a record $29.1 million, representing a 151% year-over-year increase. And the dynamic macroeconomic environment isn't denting the company's sales growth in 2025.

SoundHound forecasts this year's revenue will reach between $157 million and $177 million, up from 2024's $84.7 million. This illustrates the company's confidence in its AI platform's continued popularity.

SoundHound's excellent sales growth also translated into strong financials as well. It exited Q1 with no debt. Moreover, its balance sheet boasted $587.5 million in total assets, and its cash hoard of $245.8 million alone eclipsed total liabilities of $190.5 million.

Diving into C3.ai

C3.ai's artificial intelligence offerings cater to a different market from SoundHound's more consumer-facing AI applications. C3.ai focuses on organizational needs with turnkey AI software for fast deployment, as well as custom solutions.

For example, its AI proactively identifies maintenance needs for U.S. Air Force planes. The program proved so successful that the Air Force expanded its agreement with C3.ai in May.

Other customers include the U.S. Navy and the Department of Defense. In fact, contracts with federal, state, and local governments comprised over a third of C3.ai's bookings in its 2025 fiscal year (FY), which ended April 30.

The company's other big sector is the oil and gas industry, which represented nearly 20% of C3.ai's bookings in FY 2025. Here, a joint venture with energy giant Baker Hughes played a key role in generating sales.

Because of this alliance, C3.ai gained customers such as Shell and ExxonMobil. At the end of May, C3.ai renewed its partnership with Baker Hughes through June of 2028.

This is one of many partnerships C3.ai established to capture customers. Its partner network includes tech giants Microsoft and Alphabet-owned Google Cloud. The partnerships contributed 73% of the agreements closed in fiscal 2025.

This sales approach resulted in record revenue of $108.7 million, a 26% year-over-year increase, in the company's fiscal Q4. Sales growth is anticipated to continue, with Q1 revenue in FY 2026 forecast to hit at least $100 million, up from $87.2 million in the prior year.

In addition, its full-year fiscal 2025 revenue of $389.1 million represented 25% year-over-year growth, and C3.ai expects to up that in the next fiscal year. It estimated between $447.5 million and $484.5 million in fiscal 2026 sales.

Choosing between SoundHound and C3.ai

Both C3.ai and SoundHound are successfully expanding their AI businesses. So how do you decide which is the better buy right now?

To assess that, here's a look at the price-to-sales (P/S) ratio for both companies, a commonly used metric that measures how much investors are willing to pay for every dollar of revenue.

Data by YCharts.

SoundHound's P/S multiple was sky-high at the start of the year but has since dropped. Even so, it remains far higher than C3.ai, indicating C3.ai is the better value.

With its key Baker Hughes partnership renewed, C3.ai is positioned for years of growth ahead. That's in spite of the current macroeconomic uncertainty, thanks to the secular trend of AI.

After all, industry forecasts predict substantial growth in the AI market, from 2024's $184 billion to a remarkable $826 billion by 2030. And as Nvidia CEO Jensen Huang stated, "Countries around the world are recognizing AI as essential infrastructure -- just like electricity and the internet."

This suggests C3.ai's government business is likely to remain a growth area as the AI ramp-up extends over the ensuing years. With this factor in its favor and a lower valuation compared to SoundHound, C3.ai wins out as the better long-term investment in AI.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Robert Izquierdo has positions in Alphabet, C3.ai, Microsoft, Nvidia, and SoundHound AI. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends C3.ai and Stellantis 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.