When looking for artificial intelligence (AI) stocks with market caps under $5 billion to invest in, two of the most popular names are SoundHound AI (NASDAQ: SOUN) and BigBear.ai (NYSE: BBAI). While both stocks were volatile in 2025, BigBear.ai was clearly the investor favorite between the two. So far in 2025, SoundHound stock is down 37% while BigBear.ai stock climbed 53%.
Let’s look at which stock may outperform in 2026.
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While SoundHound’s stock underperformed BigBear.ai’s by a wide margin in 2025, operationally, it was the better performer. It more than doubled its revenue through the first nine months of the year, and grew it by a robust 68% year over year in Q3. BigBear.ai, on the other hand, has seen its revenue decline this year, including its sales sinking by 20% last quarter.
And while one knock on SoundHound has been its gross margins, they, too, were much better than BigBear.ai’s. In Q3, SoundHound improved its gross margin sequentially from 39% in Q2 to 42.6%, and its adjusted gross margin from 58.4% to 59.2%, as it works to reprice some legacy contracts from its Amelia acquisition. BigBear.ai’s gross margin, meanwhile, sank to 22.4% last quarter from 25.9% a year ago. Gross margins are important because they directly determine how revenue flows into profits.
Meanwhile, SoundHound is in the midst of a big agentic AI push. The company has done a nice job establishing itself as a leader in voice AI, where its technology can more quickly and accurately determine a person’s intent, enabling conversations to flow more naturally. Following its acquisition of virtual agent leader Amelia, SoundHound is now combining the two companies’ technologies to create voice-powered AI agents that can act like virtual employees.
SoundHound was already growing quickly in its core auto and restaurant verticals before the Amelia deal, which also brought with it a strong presence in industries such as healthcare, insurance, and financial services. It has now just begun rolling out its new Amelia 7 platform with AI agents, which should be a growth driver in 2026, and it is nearing earnings before interest, taxes, depreciation, and amortization (EBITDA) profitability.
Similar to how SoundHound transformed its business through its acquisition of Amelia, BigBear.ai is looking to do the same thing through its pending acquisition of Ask Sage.
BigBear.ai is primarily an analytics and systems integrator serving the U.S. government. One of the main reasons its gross margins are so low is that its engineers and data scientists often need to be on-site for the government projects they are assigned to. In other words, it’s not a pure AI-focused software-as-a-service (SaaS) company.
However, Ask Sage gives it a fast-growing AI platform that was specifically designed to help the government and other highly regulated businesses deploy secure AI models and agents. Ask Sage is the only model-agnostic generative AI platform with FedRAMP High accreditation, and as a result, it’s been growing rapidly, with its annual recurring revenue (ARR) surging sixfold over the past year. The deal should not only help BigBear.ai drive revenue growth, but also help improve its gross margins. The company has also said it’s on the lookout for similar types of acquisitions.
And while its stock performed better than SoundHound this year, it’s still the cheaper stock on a forward price-to-sales ratio (P/S) basis, trading at about 15 times 2026 analyst estimates, versus 20 times for SoundHound.
I would categorize both SoundHound and BigBear.ai as speculative stocks. SoundHound has clearly performed better operationally, growing its revenue quickly and doing a nice job of improving its gross margins throughout the year.
I also think the company has a bigger overall opportunity. The agentic AI space is crowded, but its voice-first approach can be a real differentiator, and it’s just scratching the surface of this opportunity. As such, I think it will be the better-performing stock in 2026.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
