SOUN or BBAI: Which Russell 2000 AI Stock Is a Better Buy for Investors?

Artificial intelligence (AI) remains one of the hottest investment themes of the decade, and even small-cap stocks are riding the wave. Among them, SoundHound AI (SOUN) and BigBear.ai (BBAI), both listed on the Russell 2000 index, have captured investor interest with their bold AI-driven visions. But which of these two under-the-radar players offers the better upside potential right now? Let’s break it down.

SoundHound saw its stock skyrocket by more than 100% in the last 12 months, fueled by strong revenue momentum, while BigBear.ai also rallied with a 180% gain. However, that breakout performance has since given way to sharp volatility. So far in 2025, both stocks have suffered steep pullbacks, with SoundHound down 54% year to date, outpacing BigBear.ai’s 16% decline.

Is SOUN a Good Stock to Buy?

SoundHound AI specializes in voice recognition and natural language processing, offering AI-driven solutions across industries. SoundHound started 2025 strong, posting Q1 revenue of $29.1 million, up 151% from a year ago, driven by growing demand for voice AI. Crucially, no single customer made up over 10% of its revenue, showing a diversified client base and broad market appeal.

That said, like many young tech firms, SoundHound is still burning cash and faces stiff competition. Big players like Amazon’s (AMZN) Alexa, Alphabet’s (GOOGL) Google Assistant, and Apple’s (AAPL) Siri are pouring resources into voice AI, creating stiff competition that could put pressure on SoundHound. However, its edge lies in offering an independent AI platform, giving customers more control compared to Big Tech. Meanwhile, if the economy weakens, major clients like automakers and restaurants may scale back tech spending, potentially slowing demand for SoundHound’s services.

Despite its recent drop, SoundHound may still appeal to long-term growth investors. But buyers should be ready to weather short-term volatility as the company works to seize its broader market potential.

Is BigBear.ai a Good Investment for the Long Term?

BigBear.ai provides data-driven decision intelligence solutions, primarily to the U.S. defense, intelligence, and government sectors. The company is gaining serious traction, with its contract backlog of $385 million as of March 31, 2025. Major wins like a $13.2M DoD contract and partnerships with Amazon and Palantir (PLTR) highlight growing trust in its AI solutions. These deals not only boost revenue visibility but also reinforce BigBear’s position as a rising force in defense-focused AI.

On the flip side, the company reported a Q1 2025 net loss of $62 million and expects to stay in the red this year as it continues heavy investment. Moreover, its reliance on U.S. government and defense contracts is another red flag amid federal budget uncertainty.

Overall, BigBear.ai offers long-term potential with growing government contracts and strategic partnerships, but the company remains unprofitable and heavily reliant on federal spending. Continued cash burn, delayed contract funding, and market volatility make it a high-risk, high-reward play for speculative investors.

SOUN or BBAI: Which Stock Offers Higher Upside, According to Analysts?

Using TipRanks’ Stock Comparison Tool, we compared SOUN and BBAI to see which small-cap AI stock analysts favor. Both carry a Moderate Buy rating and show similar upside potential. SOUN stock has a price target of $11.50, implying a 26.4% gain, while BBAI is expected to rise nearly 30% with a $4.83 target.