SoundHound’s AI platform has exploded in popularity.
SoundHound AI has expanded from a single niche to a larger offering, as has Palantir.
SoundHound AI’s stock is much cheaper than Palantir’s.
10 stocks we like better than SoundHound AI ›
Palantir has been one of the best artificial intelligence (AI) stocks that investors have been able to buy since the AI arms race began in 2023. Despite the recent selloff, the stock is up nearly 2,600% since the start of 2023 — an absolutely incredible return. Unless you have access to a time machine, there’s no going back to capture those gains, and investors need to identify other stocks that have shown similar aspects to Palantir to find the next big growth stock.
One that I think could deliver strong growth similar to Palantir is SoundHound AI (NASDAQ:SOUND). This under-the-radar stock is growing at an incredible pace, and looks like an early stage Palantir. But can it beat Palantir in the next decade?
Image source: Getty Images.
Palantir and SoundHound AI are both artificial intelligence companies that are developing enterprise solutions for their clients, but they are not competitors. Palantir’s software focuses on AI-powered data analysis and is there to help its customers make the best possible decisions every time. It also has AI-powered generative agents that can automate some processes that traditionally required human data manipulation.
SoundHound’s AI product is in a completely different AI field. Its AI platform is voice recognition software that can be used to automate human-to-human interactions. This has a wide variety of applications, but some of the biggest use cases so far are in restaurants and car attendants. SoundHound AI is also making a push into healthcare, insurance and financial services. If SoundHound’s AI platform can outperform human counterparts, it could be a source of massive optimization in all those industries, giving it a huge growth runway.
SoundHound’s AI product has one thing in common with Palantir: It’s not tailored to a specific industry. Although each began serving a particular industry, they evolved their product to meet the demands of a wide variety of customers, allowing Palantir to grow into the giant it is today. If SoundHound AI can achieve similar adoption to Palantir, it will be a huge investment success story.
But will it beat Palantir over the next decade?
During Q3, SoundHound AI delivered an impressive 68% growth. This exceeds Palantir’s growth rate of 63%. However, there is a massive difference in size. Palantir’s Q3 revenue totaled $1.18 billion, while SoundHound AI was a comparatively puny $42 million. This makes Palantir’s growth even more impressive, but if SoundHound AI can maintain this growth rate for a long time, it will be a very successful stock pick. The success of SoundHound AI depends on how well its audio recognition software is adopted. If its products are adopted by any company that has a customer service wing and consumers have a positive interaction with them, SoundHound AI could be an impressive winner in the long run.
What sets Palantir and SoundHound AI apart for now is profitability. Palantir’s profitability is quite impressive, as it posted an operating margin of 33% during Q3. That far exceeds SoundHound AI’s profound levels of unprofitability.
SOUN Operating Margin Data (Quarterly) from YCharts
Although SoundHound AI is far more unprofitable than Palantir was before 2023, it can still dig itself out of the hole if it makes profits a priority. Palantir did this starting shortly before 2023, and it turned into a very successful stock.
If SoundHound AI is to beat Palantir over the next decade, it will need to improve its operating margin dramatically. That’s something that’s easier to do at scale, as SoundHound AI increases its revenue, looking for signs of improving profitability.
The last comparison is valuation. Because SoundHound AI is not profitable, using the price to sales (P/S) ratio is the best metric. SoundHound AI trades at a price of 31 times sales, but this is much cheaper than what Palantir trades.
SOUN PS Ratio data from YCharts
At 112 times sales, Palantir is one of the most expensive stocks on the stock market, and will have a hard time meeting expectations. That’s a ton of growth priced into the stock already, and even though it’s delivering impressive results, it needs to hold them for a long time to justify its current price.
As a result, SoundHound AI has the potential to beat Palantir over the next decade if it can improve its margins. If it can do that, then SoundHound AI has a lower valuation starting point and superior growth rates work to its advantage. The real success of SoundHound AI will come down to how well its software is adopted by its target clientele and whether consumers accept the transition from humans to AI. This is far from a guarantee, but if SoundHound AI can deliver, it will be a big winner. If his product fails or the consumer rejects the integration of AI, then AI SoundHound may not be all that it is hyped to be. I think the real answer probably lies somewhere in the middle, but this can still lead to a successful stock pick in the long run.
Before you buy stock in SoundHound AI, consider this:
the Motley Fool Stock Advisor a team of analysts has identified only what they believe they are 10 best stocks for investors to buy now… and SoundHound AI was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix I made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $562,536!* Or when Nvidia I made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you will have $1,096,510!*
Now, it is worth noting Stock consultant total average income is 981% — a market-crushing outperformance compared to 187% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisorand join an investment community built by individual investors for individual investors.
See the 10 stocks »
* The Stock Advisor returns from November 24, 2025
Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
This Under-the-Radar AI Stock Could Beat Palantir Over the Next Decade was originally published by The Motley Fool
