Amid recent market volatility, investors may be scoping out better buying opportunities for some of the up and coming but lesser-known artificial intelligence stocks.
Two such companies are BigBear.ai BBAI and SoundHound AI SOUN, whose stocks are among the top trending names on Zacks.com. Notably, both belong to the Zacks Computers-IT Services Industry which is in the top 33% of approximately 246 Zacks industries.
That said, let’s see if the risk to reward is favorable to invest in BigBear or SoundHound stock, which trade at $4 and $10 a share respectively.
Based in Maryland, BigBear went public in 2021 as a provider of artificial intelligence, machine learning, cloud-based analytics, and cyber engineering solutions. Launching its IPO in 2022, New York-based SoundHound is an innovator of conversational intelligence, offering an independent voice AI platform that enables businesses to deliver conversational AI experiences.
As of now, BigBear and SoundHound aren’t profitable but have the top line growth that alludes to their future earnings potential.
Rounding out fiscal 2024, BigBear’s total sales are expected to rise 8% to $168.57 million compared to $155.16 million in 2023. More reassuring, FY25 sales are projected to spike another 15% to $194.31 million. BigBear will be reporting Q4 results after-market hours on Thursday, March 6.
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Pivoting to SoundHound, its sales nearly doubled in FY24 to $85 million. Better still, SoundHound’s total sales are forecasted to soar another 96% this year to $166.2 million.
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Based on Zacks estimates, BigBear is slated to post an adjusted loss of -$0.75 a share in FY24 compared to -$0.40 in 2023. However, a narrower loss of -$0.20 a share is expected in FY25.
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As for SoundHound, the company posted an adjusted loss of -$1.02 in FY24, a decline from -$0.38 in 2023. That said, SoundHound is expected to move closer to the profitability line in FY25 and FY26 with estimates at -$0.25 and -$0.19 a share.
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Year to date, BigBear’s stock is up +10% with SoundHound shares plummeting a grizzly -47% after posting a wider than expected earnings loss for Q4 last Thursday. Still, over the last two years, SoundHound stock has soared more than +200% with BigBear shares up +50%.
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Optimistically, BigBear and SoundHound stock land a Zacks Rank #3 (Hold) at the moment. Their top line growth is certainly favorable in regards to weighing risk to reward, but better buying opportunities could still be ahead.
Furthermore, it will be important to monitor their balance sheets, especially with BBAI and SOUN being speculative stocks that are in the beginning stages of corporate life.
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BigBear.ai Holdings, Inc. (BBAI) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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