The buzz around generative artificial intelligence (AI) since the launch of OpenAI’s ChatGPT has boosted interest in AI stocks. However, investors are now questioning the hype around several AI stocks and fear that the bubble might burst, given steep valuations and macro uncertainties. Nonetheless, Wall Street is bullish on the potential of some AI stocks due to their impressive fundamentals and long-term prospects.
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Using TipRanks’ Stock Comparison Tool, we placed Palantir Technologies (PLTR), SoundHound AI (SOUN), and BigBear.ai Holdings (BBAI) against each other to find the AI stock with the highest upside potential, according to Wall Street analysts.
Palantir Technologies (NASDAQ:PLTR) Stock
Palantir Technologies stock has declined more than 10% over the past five trading sessions due to worries about the AI bubble bursting. Also, valuation concerns raised by short-seller Andrew Left of Citron Research impacted investor sentiment on the data analytics company.
Despite the recent pullback, PLTR stock is still up about 110% year-to-date. This impressive rally is driven by the company’s solid financials, backed by strong demand for its AI-powered offerings across its government and commercial businesses. Notably, Palantir’s Q2 revenue jumped 48%, marking the first time the company’s quarterly top line hit the $1 billion mark.
Is PLTR Stock a Good Buy?
Following the Q2 print, Raymond James analyst Brian Gesuale reiterated a Hold rating on Palantir Technologies stock. The 5-star analyst stated that the company delivered “another exceptionally strong” quarterly performance and upbeat guidance. Gesuale noted that solid momentum in PLTR’s Artificial Intelligence Platform (AIP) offering and demand across virtually all markets supported management’s guidance upgrade.
While Gesuale acknowledged PLTR’s impressive momentum and the possibility that the stock will be much higher over time if even half of the company’s financial aspirations materialize, he prefers to be on the sidelines currently due to its lofty valuation. Specifically, Gesuale highlighted that PLTR stock’s valuation has jumped from 7x sales in 2023 to 74x sales currently.
Overall, Wall Street has a Hold consensus rating on Palantir Technologies stock based on five Buys, 13 Holds, and two Sell recommendations. The average PLTR stock price target of $156.78 indicates a possible downside of 1.2% from current levels.
SoundHound AI (NASDAQ:SOUN) Stock
SoundHound AI offers artificial intelligence-powered voice and conversational intelligence solutions to several end markets, including retail, automotive, healthcare, and restaurants. SOUN stock has declined more than 19% over the past five trading sessions due to concerns about the hype around AI stocks and macro uncertainties. It is down by nearly 37% year-to-date.
Nonetheless, analysts are bullish on SoundHound AI stock due to its rapid growth. SOUN delivered a 217% year-over-year increase in its Q2 revenue, driven by the demand for its AI-powered products. The company also raised its full-year revenue guidance. There are some concerns about continued losses and a year-over-year contraction in Q2 gross margin due to the impact of unfavorable product mix following recent acquisitions. However, management expects more cost synergies in the upcoming quarters, is evaluating low-margin contracts, and intends to identify other areas to enhance efficiency.
Is SOUN Stock a Good Investment?
Interestingly, SoundHound AI stock earned three rating upgrades following the Q2 print. Ladenburg Thalmann analyst Glenn Mattson upgraded SoundHound stock to Buy from Hold and increased the price target to $16 from $9. The 5-star analyst continues to view voice as one of the key early applications for AI systems, highlighting that SOUN is a leader in this space and is highly useful for enterprises looking to adopt AI functionality.
While the Amelia acquisition still needs further integration, Mattson contends that it is providing solid benefits in terms of scale, new lead generation, and an entry into the enterprise business. The analyst believes that SoundHound’s growth and scale justify its premium valuation.
With five Buys and two Hold recommendations, Wall Street has a Moderate Buy consensus rating on SoundHound AI stock. At $15, the average SOUN stock price target indicates 19.4% upside potential from current levels.
BigBear.ai Holdings (NYSE:BBAI) Stock
BigBear.ai offers AI-powered decision intelligence solutions. Disappointing Q2 performance, a lowered revenue outlook, and valuation concerns have dragged down BBAI stock by more than 25% over the past month. In particular, BBAI reported an 18% year-over-year decline in its Q2 revenue, blaming disruptions in federal contracts.
BBAI’s performance was quite disappointing, given optimism about the long-term growth potential of defense-focused AI plays. BBAI’s Q2 results were in contrast to the growth delivered by Palantir, another AI company with defense exposure. On the positive side, BBAI ended Q2 with a strong cash position of $391 million, which will support its growth initiatives.
Is BBAI Stock a Good Buy?
In reaction to the Q2 print, H.C. Wainwright analyst Scott Buck lowered the price target for BigBear.ai Holdings stock to $8 from $9 but retained a Buy rating. The analyst noted that BBAI lowered its 2025 revenue outlook to reflect the decline in Q2 revenue and disruptions in federal contracts, mainly in programs supporting the U.S. Army, as they seek to modernize their data architecture. Buck contended that while BBAI’s Q2 results were disappointing, they were not surprising, given that many peers in the defense space also experienced program delays.
Buck expects improvement in revenue visibility as BBAI heads into 2026. Longer term, the analyst believes that BigBear.ai is well-positioned to benefit from the One Big Beautiful Bill, which significantly increases investment in areas aligned with its core strengths. Buck sees an improved balance sheet and favorable industry and legislative trends as catalysts for BBAI’s long-term growth.
Overall, BigBear.ai Holdings has a Moderate Buy consensus rating based on two Buys and one Hold recommendation. The average BBAI stock price target of $5.83 indicates 6% upside potential. Even after the recent pullback, BBAI stock is up about 24% so far this year.
Conclusion
Wall Street is cautiously optimistic on SoundHound AI and BigBear.ai stocks, but sidelined on Palantir stock. Analysts see higher upside potential in SOUN stock than in the other two AI stocks. Wall Street views the pullback in SOUN stock as an attractive buying opportunity to gain exposure to this AI-powered voice technology company.