Palantir Technologies and SoundHound AI are experiencing different stock market outcomes in 2025. Palantir saw a 71% rise due to strong demand for its AI solutions. Conversely, SoundHound’s stock fell over 43%. Palantir’s contract values grew significantly, while SoundHound reported impressive revenue increases but struggles with market challenges. Investors must weigh the advantages and valuation of these two AI stocks before investing.
In the race for AI dominance, Palantir Technologies (NASDAQ: PLTR) and SoundHound AI (NASDAQ: SOUN) are on very different trajectories. While Palantir stock surged an impressive 71% in 2025, SoundHound, unfortunately, found itself down over 43%. Investors are flocking to Palantir in droves, cheekily ignoring its steep valuation as demand for its sophisticated AI solutions continues to grow, while SoundHound grapples with challenges and missed opportunities, despite its own advances in conversational AI.
So, should investors think about jumping into SoundHound’s beleaguered stock or stay loyal to Palantir, even if it feels pricey? Let’s dive in and unpackage these options.
The success of Palantir’s AI Platform (AIP) speaks volumes. It’s proving to be a beacon for businesses looking to enhance efficiency and reduce downtime. Customers are not only starting with Palantir, but they’re also expanding rapidly. Take, for instance, a large healthcare outfit that kicked things off with a boot camp last December. They quickly moved to a five-year contract, worth an impressive $26 million.
A global bank similarly made waves, announcing a pilot project with Palantir, leading to a $2 million engagement a month later, which blossomed into a $19 million agreement shortly afterward. This trend isn’t just a fluke; Palantir reported signing contracts worth $1.5 billion in the first quarter of 2025, marking a staggering growth of 66% compared to the same time last year.
What’s more, Palantir’s total remaining deal value also soared to nearly $6 billion, a 45% increase from last year. This indicates that they’re winning new contracts faster than they can fulfill existing obligations. With the annual growth rate of their contract value outpacing the AI software market’s projected 40%, Palantir seems positioned for substantial accelerated growth. They’re in a prime spot to ride the $153 billion revenue potential of the AI market by 2028, generating $3.1 billion in revenue over the last 12 months.
On the other hand, SoundHound AI, while struggling, has its own unique advantages. It’s tapping into the conversational AI concept, a sector predicted to explode in value 11-fold by 2035, eventually hitting $136 billion as annual revenue. Impressive, right? Their revenue shot up by a mind-boggling 151% year-over-year just in the first quarter, expecting their revenue to almost double to $167 million by 2025.
SoundHound isn’t just resting on its past successes either. They reported a jaw-dropping $1.2 billion in subscriptions and bookings backlog, a 75% increase from last year, illustrating a solid growth path ahead. Recently, they unveiled a new platform that allows customers to create and deploy voice-ready AI agents, further solidifying their foothold in voice AI, projected to grow at about 35% annually until 2034.
The verdict? Both stocks are compelling players in the AI game, yet their growth trajectories are painted in different strokes. SoundHound may be outpacing Palantir due to its smaller revenue base, but Palantir’s consistent contract value growth shows promise for future success. The crux, however, lies in the valuation.
Palantir is trading at a staggering 103 times sales, a hefty price compared to SoundHound’s 40 times sales. Sure, Palantir might justify its valuation down the road, but that premium might deter new investors. Meanwhile, SoundHound’s price may feel more digestible given its growth and the potential of its product pipeline.
As investors ponder whether to sprinkle $1,000 into Palantir, some forewarnings surface. The Motley Fool’s Stock Advisor recently pointed out 10 other lucrative stocks—Palantir was notably absent from that list. Given past performance, it might feel risky to ignore their guidance. Investors looking to line their pockets with winning stocks might want to explore outside of Palantir and consider what else is on the table.
Ultimately, Palantir and SoundHound represent two sides of the AI coin—with Palantir’s solid stability against SoundHound’s hot-paced growth. Investors face a tough choice between a hot stock in Palantir, albeit at a steep price, versus the potentially undervalued and fast-expanding SoundHound. The market’s fickle nature makes timing crucial, and as always, some advice from trusted analysts could steer the way to a sound decision.
Original Source: www.nasdaq.com
