The Motley Foolยท2025-11-26 21:25Core Insights - The article discusses the contrasting performance of two AI companies, BigBear.ai and SoundHound AI, in 2025 as organizations globally adopt AI technologies [1][2]. BigBear.ai Overview - BigBear.ai focuses on national security applications, utilizing AI for facial recognition and threat identification at airports [2][3]. - The company has seen a revenue increase of only 2% in 2024, reaching $158.2 million, and has faced challenges due to spending cuts from the Trump administration [4][5]. - Revenue for the first three quarters of 2025 dropped to $100.4 million from $114.4 million in the same period the previous year, leading to an operating loss of $133.4 million [5]. - BigBear.ai is pursuing growth through the acquisition of Ask Sage, which is expected to generate $25 million in annual recurring revenue in 2025, significantly boosting sales in 2026 [6]. SoundHound AI Overview - SoundHound AI applies AI for commercial purposes, such as interpreting human speech for food orders, and has a diverse customer base including major restaurant chains [8][9]. - The company reported revenue of $113.9 million in the first three quarters of 2025, more than doubling from $50.2 million in the same period of 2024, prompting a revenue forecast increase to $165 million to $180 million for the full year [9]. - Despite strong revenue growth, SoundHound experienced an operating loss of $115.9 million in Q3, up from a loss of $33.8 million the previous year, and is working on cutting expenses [10]. - The company anticipates achieving adjusted EBITDA profitability by the end of 2025, contingent on meeting its revenue targets [11]. Investment Considerations - Both companies are currently unprofitable, but SoundHound's significant revenue growth and diversified income streams make it a more attractive investment compared to BigBear.ai, which relies heavily on government contracts [14][16]. - SoundHound's revenue growth indicates a strong market demand for its products, while BigBear.ai's stagnant growth suggests less competitive offerings [17]. - SoundHound's price-to-sales (P/S) ratio is 30, significantly higher than BigBear.ai's 12, indicating that while SoundHound is a better investment option, its valuation may be too high at present [18].