SoundHound makes use of AI to interpret human speech, making use of its expertise for industrial functions resembling taking verbal orders from clients.
Astera Labs gives {hardware} merchandise which can be the nuts and bolts for powering AI methods.
The rise of synthetic intelligence (AI) has unleashed a tidal wave of associated companies to think about investing in. Amongst these are SoundHound AI(NASDAQ: SOUN) and Astera Labs(NASDAQ: ALAB).
The previous delivers voice-enabled AI that firms could make use of in buyer interactions, resembling taking orders at restaurant drive-thrus. The latter acts behind the scenes, offering parts utilized in knowledge facilities.
Each are seeing sturdy gross sales progress due to the demand for AI-related applied sciences. However which appears to be like more likely to be the higher long-term funding?
Picture supply: Getty Pictures.
Shopping for SoundHound shares means accepting loads of volatility, given its beta of almost 3. For instance, final December, the inventory skyrocketed to a 52-week excessive of $24.98, however fell again to earth in 2025, hitting a 52-week low of $6.52 on April 7 after President Donald Trump’s tariff insurance policies induced the inventory market to crash.
SoundHound’s share value resurgence occurred in October after funding financial institution H.C. Wainwright raised its value goal on the inventory to $26. The common goal amongst Wall Avenue analysts is now $16.94.
This wild trip illustrates how AI’s recognition amongst traders has impacted the inventory, in addition to the truth that the corporate has each strengths and shortcomings.
As an example, the AI voice skilled has achieved numerous notable wins this 12 months. In October, it introduced an expanded settlement with French insurance coverage supplier Apivia Courtage, a deal that took place due to the spectacular outcomes delivered by SoundHound’s agentic AI. Within the third quarter, SoundHound’s gross sales soared to file income of $42 million, a 68% year-over-year enhance.
Nevertheless, the corporate made numerous acquisitions that, whereas turbocharging gross sales, dramatically boosted its prices. Consequently, it booked a internet lack of $109.3 million within the third quarter, a rise of greater than 400% from its lack of $21.8 million within the prior-year interval. That substantial sum, in opposition to income of $42 million, is regarding, though the corporate indicated it’s working to cut back bills.
Astera Labs’ share value strikes have been extra favorable for shareholders. The inventory went from a 52-week low of $47.13 through the April crash to a excessive of $262.90 on Sept. 18.
Shares surged in September within the wake of Wall Avenue analyst upgrades, resembling Deutsche Financial institution setting a value goal of $200. However Astera’s sturdy enterprise efficiency justified these analyst strikes.
The corporate generated file third-quarter income of $230.6 million, a powerful 104% year-over-year enhance. This helped Astera obtain quarterly internet revenue of $91.1 million, an unlimited enchancment over its internet lack of $7.6 million within the prior-year interval.
That success was pushed by demand for its knowledge middle parts, which allow AI methods to function with larger velocity and effectivity. To additional strengthen its choices, the corporate is buying aiXscale Photonics, a German specialist in optical-glass coupling expertise. That may give Astera the power to offer the high-bandwidth, low-power options wanted by clients as AI tech infrastructure expands to knowledge facilities the scale of small cities.
Each SoundHound and Astera Labs have benefited from the AI megatrend. However whereas each firms delivered income will increase within the third quarter, searching over an extended time-frame gives an necessary perception for evaluating them: Astera has skilled the stronger gross sales progress over time.
Including to that is the truth that Astera is worthwhile. SoundHound just isn’t: Within the third quarter, it booked an adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) lack of $14.5 million. Nevertheless, administration believes it will probably attain profitability on an adjusted EBITDA foundation within the close to future.
By way of valuation, each firms are at about the identical stage when seen by the lens of their price-to-sales ratios. This metric measures how a lot traders are keen to pay for each greenback of income produced over the trailing 12 months, and is often used to gauge the values of firms which can be unprofitable, resembling SoundHound.
SoundHound’s valuation soared early in 2025, and that contributed to its share value drop because the 12 months progressed. Now, its valuation is extra cheap.
Nevertheless, contemplating Astera has about the identical gross sales a number of, but is a worthwhile enterprise with stronger income progress over time, it’s the superior AI inventory to spend money on right now.
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