BigBear.ai Struggles While SoundHound AI Surges in Contrasting Market Fortunes

BigBear.ai and SoundHound AI, two companies leveraging artificial intelligence (AI) for various applications, see their stock performances diverge sharply in 2025. BigBear.ai's stock price surges by 47%, while SoundHound AI's declines by over 21%.

BigBear.ai's Stock Surge Masks Underlying Issues

BigBear.ai, which provides AI and machine learning (ML) solutions to commercial and government clients, reports a significant 18% year-over-year decline in Q2 revenue, dropping to just under $40 million. Management attributes this drop to 'lower volume on certain Army programs,' highlighting the company's heavy reliance on federal contracts.

The company's margins have also shrunk, and losses have increased. This contrasts with competitors like Palantir, which is experiencing robust growth in both commercial and government sectors. BigBear.ai's revenue backlog of $380 million at the end of Q2 is mostly unfunded or unexercised, casting doubt on its future revenue visibility. The company has lowered its 2025 guidance, expecting a double-digit percentage drop in its top line.

SoundHound AI's Strong Growth Continues

SoundHound AI, on the other hand, is thriving. Its Q2 revenue jumps 217% year-over-year to $43 million, driven by a growing customer base across automotive, hospitality, financial services, and healthcare industries. The company's potential revenue backlog stood at $1.2 billion at the end of 2024, and it is successfully converting this backlog into actual revenue.

SoundHound AI has raised its 2025 revenue guidance, projecting a top-line doubling to $169 million. This strong performance is attributed to strategic product development and acquisitions, positioning the company well in the competitive AI market.

Industry Context and Implications

The contrasting fortunes of BigBear.ai and SoundHound AI reflect the broader dynamics in the AI sector. Companies that can diversify their revenue streams and demonstrate consistent growth are more likely to attract investor confidence. BigBear.ai's overreliance on government contracts and declining financials may limit its future upside, while SoundHound AI's diversified customer base and robust growth trajectory make it a more attractive investment.

References

• Better Artificial Intelligence (AI) Stock: BigBear.ai vs. SoundHound AI | The Motley Fool