Voice artificial intelligence (AI) platform provider SoundHound AI, Inc. SOUN and software company Palantir Technologies Inc. PLTR have seen their shares increase over 800% and 400%, respectively, in the past year courtesy of the AI boom. 

However, while one shows more promise for the future, the other may come across challenges ahead. Let us thus see how investors should play such stocks – 

The Bullish Case for SOUN Stock

The potential U.S.-China trade war may impact SoundHound AI’s profits in China, but indications from China suggest they may avoid escalation, benefiting SoundHound AI stock. 

Waning inflation in the United States reduced the likelihood of interest rate hikes, benefiting SoundHound AI’s cash flows. The Federal Reserve has kept rates unchanged in its latest policy meeting.

SoundHound AI has seen explosive business growth in the past year due to the widespread adoption of its products such as voice-enabled AI systems. Several auto brands, including electric vehicle manufacturers, use the company’s voice AI. 

Moreover, SoundHound AI’s audio inputs are widely used in generative AI models for drive-through ordering at restaurants like Chipotle Mexican Grill, Inc. CMG (read more: Is Under $20 SoundHound AI Stock the Next NVIDIA, and a Buy?).

The Bullish Case for PLTR Stock

Palantir recently reported blowout fourth-quarter earnings and issued strong guidance for the current year due to the high demand for its Artificial Intelligence Platform (AIP), which possesses the mechanisms to automate tasks beyond human capabilities. 

Palantir’s revenues of $828 million for the fourth quarter were up 36% year over year. The 2025 revenue guidance is $3.75 billion, up 31% from a year ago. Revenues from both U.S. commercial and government segments are expected to pick up. 

Palantir’s initiatives to integrate machine learning functionalities with innovative AI have helped its business to grow. Moreover, the company’s remaining performance obligation, or sales not recorded as revenues in the fourth quarter, exceeded current revenue growth, a tell-tale sign of further expansion (read more: Is It Too Late to Buy Palantir Stock Post Blockbuster Quarter?).

Why Palantir Is a Better Buy Than SoundHound AI Now?

Despite favorable macro trends and solid demand for its products, SoundHound AI’s sole dependency on equity financing and resource constraints raises doubts about its future growth. 

Moreover, in its recently reported quarter, SoundHound AI posted net losses of about $22 million, while its market capitalization is $6.2 billion. The latest losses don’t justify such a high market cap, which may have an impact on the stock price. Risk-bearing investors, therefore, can hold onto SoundHound AI stock. 

But it’s worth placing bets on the Palantir stock as it continues to create a niche in the expanding generative AI market. Its leadership in AI-powered process mining for workflow and customer satisfaction enhancements, and its increasing U.S. commercial client base point to strong growth potential, making PLTR a compelling buy at the moment. 

Palantir stock, thus, rightfully has a Zacks Rank #2 (Buy), whereas SoundHound AI stock has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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