Symbotic Inc. (Nasdaq: SYM) vs. SoundHound AI, Inc. (Nasdaq SOUN): Exploring AI Stock Opportunities

In the realm of often-overlooked AI stocks, two distinct players have emerged: Symbotic Inc. (Nasdaq: SYM) and SoundHound AI, Inc. (Nasdaq SOUN). Both offer unique investment avenues in the thriving artificial intelligence (AI) market. Symbotic specializes in AI-powered robots designed to automate large warehouses, while SoundHound focuses on developing cutting-edge speech recognition technologies catering to diverse industries.

To see what Wall Street is saying about Symbotic Inc. (Nasdaq: SYM) click here:
To see what Wall Street is saying about SoundHound AI, Inc. (Nasdaq SOUN) click here:

These two companies made their public debut through mergers with special purpose acquisition companies (SPACs) last year, but their stock trajectories have taken notably different paths. Symbotic began trading in June last year at $10.54 and has since surged to approximately $32, reflecting an impressive three-fold increase. In contrast, SoundHound commenced trading in April, starting at $8.72, but currently commands a value of only $2 per share.

So, why has Symbotic outperformed SoundHound by such a substantial margin, and does it stand as the superior AI-based investment for the foreseeable future?

Symbotic's Success Story:

Symbotic Inc. (Nasdaq: SYM)'s claim to fame lies in its platform's ability to automate the processing of pallets and cases with fully autonomous robots. The company asserts that a $50 million investment in one of its modules can yield $250 million in lifetime savings spanning 25 years.

Walmart, the retail giant, is Symbotic's most prominent supporter, having owned over 60% of the company before its SPAC-backed entry into the market. Thanks to a partnership to automate all 42 of Walmart's regional distribution centers across the U.S., Walmart is not only Symbotic's biggest backer but also its largest customer. In the first three quarters of fiscal 2023, 87% of the company's revenue was generated from Walmart.

Additionally, Symbotic recently joined forces with SoftBank to establish a new warehouse-as-a-service joint venture known as GreenBox. This venture will exclusively procure automation systems from Symbotic through a substantial $7.5 billion contract. The company anticipates that this deal will result in over $500 million in annual recurring revenue, nearly half of its projected fiscal 2023 revenue, once all these systems come online.

With Walmart and SoftBank's steadfast support, Symbotic is well-positioned to capitalize on the growth of the global warehouse automation market. According to Precedence Research, this market is expected to exhibit a compound annual growth rate (CAGR) of 16% from 2023 to 2032. Fiscal 2022 saw Symbotic's revenue surge by 136%, and analysts project a CAGR of 61% in its top line from 2022 to 2025, a remarkable growth rate for a stock trading at only 2 times this year's sales.

Though Symbotic isn't yet profitable, it foresees its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turning positive in the fourth quarter of fiscal 2023, driven by earlier cost-cutting efforts. Analysts also predict profitability based on this adjusted EBITDA metric in fiscal 2024, making the stock appear attractively priced at 14 times next year's adjusted EBITDA.

SoundHound AI's Challenges:

SoundHound AI, Inc. (Nasdaq SOUN)'s product lineup includes a music recognition app, the voice-powered digital assistant SoundHound Chat AI, and the Houndify developer platform. The company also develops tools for custom speech recognition, natural language understanding, and voice search, catering to a broad spectrum of industries.

Despite its innovative offerings, SoundHound faces stiff competition in this space from tech behemoths such as Microsoft, Google (Alphabet), and Apple. However, it has remained a compelling choice for companies seeking alternatives to aligning themselves with one of these major ecosystems. SoundHound has garnered partnerships with notable names like White Castle, Hyundai, and Vizio, all integrating its services into their products and services.

While SoundHound saw a 47% revenue increase in 2022 and anticipates growth ranging from 39% to 61% this year, it still generated 67% of its revenue from its top three customers in 2022. Analysts foresee a CAGR of 48% in its revenue from 2022 to 2025. Furthermore, Fortune Business Insights predicts that the global speech and voice recognition market could expand at a CAGR of 25% from 2023 to 2030.

SoundHound's stock currently trades at 11 times this year's sales, suggesting it is not a budget-friendly option. However, its substantial long-term growth potential could justify the premium valuation. Additionally, the company could attract the attention of larger tech giants, making it a potentially enticing takeover target.

Similar to Symbotic, SoundHound is not yet profitable. Both companies anticipate their adjusted EBITDA turning positive in the fourth quarter of 2023, following strategic layoffs and aggressive spending curtailments.

Dive deeper into these AI stocks and discover what Wall Street is saying about Symbotic Inc. (Nasdaq: SYM) and SoundHound AI, Inc. (Nasdaq SOUN), click below:

To see what Wall Street is saying about Symbotic Inc. (Nasdaq: SYM) click here:
To see what Wall Street is saying about SoundHound AI, Inc. (Nasdaq SOUN) click here: