Which AI Stock, CoreWeave or SoundHound, Is the Better Buy?

An artificial intelligence (AI) revolution is underway, with two companies, CoreWeave, Inc. CRWV and SoundHound AI, Inc. SOUN, well-positioned to ride this technological wave. While CoreWeave’s shares have soared more than 220% this year, SoundHound AI’s shares surged above 110% in the past year.

Therefore, let us take a look at which of these two companies might emerge as the next significant player in AI, and whether you should own the stock now. 

Reasons to Be Bullish on CoreWeave 

CoreWeave outperformed the magnificent seven stocks this year, largely due to its close link to NVIDIA Corporation NVDA. CoreWeave’s main focus is to provide customers with access to its extensive collection of NVIDIA chips, spread across more than 30 data centers. The demand for NVIDIA’s cutting-edge Blackwell chips has exceeded expectations, making investors hopeful about CoreWeave’s prospects.

Moreover, NVIDIA’s 7% stake in CoreWeave indicates that this emerging company is positioned to be a prominent player in the upcoming AI development. CoreWeave faces competition from Microsoft Corporation’s MSFT Azure and Amazon.com, Inc.’s AMZN Amazon Web Services, as they also supply NVIDIA’s products. However, CoreWeave declared that it was the first company to offer NVIDIA’s newest chip, Blackwell Ultra, for commercial applications. This has helped position CoreWeave as the top destination for customers seeking quick access to NVIDIA’s latest innovations.

Despite uncertainties this year, CoreWeave’s revenues grew more than 400% in the first quarter, as the company successfully met demand, faced competition, and expanded thanks to significant investments. Its annual revenues soared from $16 million in 2022 to $1.9 billion in 2024. It is expected that revenues will see a CAGR of 105% to $16.6 billion from 2024 to 2027.

Most of CoreWeave’s expansion relied on large debt offerings. However, insiders bought more shares than they sold in the past year, demonstrating strong confidence that the company can efficiently scale its operations and reduce losses moving forward.

Reasons to Be Bullish on SoundHound AI 

Rising customer demand for quick service, along with labor shortages, is prompting restaurants to adopt voice automation. This trend benefits SoundHound AI, which has gained clients like Casey’s General Stores, Inc. CASY and Chipotle Mexican Grill, Inc. CMG.

Additionally, the popularity of SoundHound AI’s voice solutions is growing due to their effectiveness and automation advantages. According to MarketsandMarkets, the conversational AI market is expected to grow from $17.05 billion in 2025 to $49.80 billion by 2031, creating opportunities for SoundHound AI to improve customer acquisition. 

The $1.2 billion booking backlog for 2024 signals strong long-term revenue growth. Moreover, the total addressable market (TAM) of $140 billion suggests significant potential for further expansion. SoundHound AI also expects revenues this year to range from $157 million to $177 million. This is way more than 2024’s $84.7 million revenues (read more: SoundHound AI Vs. BigBear.ai: Which Stock Is the Better Buy?). 

CoreWeave Vs. SoundHound AI: Which Stock Is the Better Buy?

CoreWeave, despite being favored in AI infrastructure and backed by NVIDIA, carries significant debt, totaling $8.7 billion as of March 31. Interest payments on this debt accounted for 27% of its first-quarter revenues. 

Additionally, CoreWeave relies heavily on Microsoft as its main customer, making its growth vulnerable to any shift in Microsoft’s business strategy. Hence, CoreWeave’s debt load and uncertain business model make investing in the stock risky right now, and cautious investors should avoid the stock. 

On the other hand, the broad acceptance of SoundHound’s voice AI boosted its stock value, encouraging current investors to remain invested due to revenue growth potential. However, it is prudent for new investors to wait until the company becomes profitable before investing in SoundHound AI stock. This is because SoundHound AI experienced losses amounting to $188 million in the past year (read more: Can SoundHound AI Stock Be the Next NVIDIA, and Is It a Buy?). 

For now, SoundHound AI stock has a Zacks Rank #3 (Hold), whereas CoreWeave has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research