Important points
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SoundHound uses AI to interpret human speech and applies the technology to commercial applications such as taking verbal orders from customers.
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Astera Labs provides foundational hardware products to power AI systems.
The rise of artificial intelligence (AI) has created a flood of related businesses to consider investing in. Among them are: Soundhound AI(NASDAQ: SOUN) and Astera Research Institute(NASDAQ:ALAB).
The former provides voice-enabled AI that businesses can leverage for customer interactions, such as taking orders at a restaurant drive-thru. The latter works behind the scenes and provides components used in data centers.
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Sales of both companies are increasing significantly due to demand for AI-related technologies. But which one seems to be a better long-term investment?
Image source: Getty Images.
Pros and cons of SoundHound AI
Buying SoundHound stock means accepting a fair amount of volatility, considering its beta is near 3. For example, the stock soared to a 52-week high of $24.98 in December, but rebounded in 2025 to hit a 52-week low of $6.52 on April 7, after President Donald Trump’s tariff policies sent the stock market crashing.
Soundhound’s stock price recovery occurred in October after investment bank HC Wainwright raised its price target on the stock to $26. The average price target among Wall Street analysts is currently $16.94.
This wild move shows how the popularity of AI among investors is impacting the stock price, and the fact that the company has both strengths and weaknesses.
For example, AI voice experts have achieved a number of notable wins this year. In October, the company announced an expanded agreement with French insurance company Apivia Courtage, which was made possible thanks to impressive results delivered by SoundHound’s agent AI. In the third quarter, SoundHound’s sales soared, posting revenue of $42 million, up 68% year-over-year.
However, the company made a number of acquisitions that significantly increased costs while increasing sales. As a result, the company posted a net loss of $109.3 million in the third quarter. This was an increase of more than 400% from the year-ago quarter’s loss of $21.8 million. Although the company has indicated that it is working to cut costs, this large amount compared to $42 million in sales is concerning.
Overview of Astera Research Institute
Astera Labs’ stock price movement has been more favorable to shareholders. The stock rose from a 52-week low of $47.13 during the April crash to a high of $262.90 on September 18th.
The stock soared in September following an upgrade by Wall Street analysts. deutsche bank Target price set at $200. However, Astera’s strong performance justified the move by analysts.
The company generated record revenue of $230.6 million in the third quarter, an impressive 104% year-over-year increase. This enabled Astera to achieve a quarterly net income of $91.1 million, a significant improvement from the net loss of $7.6 million in the year-ago period.
This success was driven by demand for data center components that enable AI systems to operate faster and more efficiently. To further strengthen its services, the company will acquire aiXscale Photonics, a German specialist in optical glass bonding technology. This will enable Astera to provide the high-bandwidth, low-power solutions customers need as AI technology infrastructure expands to small city-sized data centers.
Choosing Between SoundHound AI and Astera Labs Stock
SoundHound and Astera Labs are both benefiting from the AI megatrend. However, while both companies achieved revenue growth in the third quarter, looking at the longer term provides important insights for comparing the two companies. Astera experienced stronger sales growth over time.
Data by YCharts. TTM = trailing 12 months.
Add to this the fact that Astera is profitable. That’s not the case with SoundHound. In the third quarter, the company posted an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $14.5 million. However, management believes it will be able to return to profitability on an adjusted EBITDA basis in the near future.
In terms of valuations, the two companies are at about the same level when viewed through the price-sales lens. This metric measures how much investors are willing to pay for each dollar of revenue generated over the next 12 months, and is often used to value unprofitable companies such as SoundHound.
Data by YCharts.
SoundHound’s valuation skyrocketed in early 2025, which contributed to the stock’s decline as the year progressed. Now that valuation is more reasonable.
But considering Astera’s sales multiple is about the same, but it’s a profitable business with stronger revenue growth over time, it’s a great AI stock to invest in today.
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Robert Izquierdo holds a position at SoundHound AI. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.
