SoundHound AI trades cheaper than Palantir despite tripling revenue growth

SoundHound AI and Palantir Technologies present compelling but different investment opportunities in the AI sector, with SoundHound trading at a significantly cheaper valuation despite faster growth rates.

The growth trajectories: Both companies are capitalizing on AI adoption but in different market segments and scales.
• SoundHound AI more than tripled its revenue to $43 million in Q2 2025, targeting the conversational AI market projected to reach $61 billion by 2032.
• Palantir’s revenue grew 48% to just over $1 billion in Q2, driven by its Artificial Intelligence Platform (AIP) adoption across commercial and government sectors.
• SoundHound raised its 2025 revenue guidance to $169 million at the midpoint, nearly double last year’s performance.

Market positioning and competitive advantages: Each company claims technological superiority in their respective niches.
• SoundHound CEO Keyvan Mohajer states their Polaris speech recognition model is “35% more accurate and four times faster than competitive models, including those offered by big tech companies.”
• Palantir’s customers report tangible benefits, with Sompo, a Japanese insurance firm, improving profit by $60 million over three years and General Mills saving $40,000 daily through AIP.

Customer growth and deal expansion: Both companies show strong momentum in customer acquisition and deal sizes.
• Palantir saw a 43% increase in customer count last quarter, with 157 deals worth $1 million or more, up from 96 year-over-year.
• SoundHound is successfully cross-selling its agentic voice AI platform to existing customers while adding new ones across restaurants, automotive, healthcare, and finance sectors.
• Deals worth $10 million or more increased 55% year-over-year for Palantir.

Valuation comparison: The size difference creates a notable valuation gap between the two stocks.
• SoundHound trades at a significant discount to Palantir’s sales multiple despite delivering faster revenue growth.
• The smaller revenue base explains SoundHound’s higher growth rate compared to the larger Palantir.

Investment considerations: The choice depends on investor risk tolerance and growth preferences.
• Investors seeking faster growth at cheaper valuations may prefer SoundHound AI’s current positioning.
• Those with higher risk appetite might still favor Palantir given its accelerating growth and established market presence in AI software platforms.