Many businesses see potential in the rapidly expanding AI industry, though each presents its own challenges.
The surging artificial intelligence (AI) market features numerous stocks worthy of consideration. Two notable examples are SoundHound AI (SOUN 4.74%) and Navitas Semiconductor (NVTS 7.77%). These firms provide access to distinct segments of the AI landscape.
SoundHound focuses on consumer-oriented, voice-activated AI and represents a share in AI software development. Conversely, Navitas plays a crucial role behind the scenes, providing semiconductor components to the data centers that support AI technologies, thus representing an investment in AI hardware.
Between SoundHound and Navitas, one may ultimately stand out as a better investment. To find out which, let’s delve deeper into each company.
Advantages and Disadvantages of SoundHound
SoundHound showcases impressive technology for AI-driven voice interactions. Its agentic AI bots perform various tasks, such as ordering food or arranging travel directly through devices like TVs or cars.
This January, the company introduced its Vision AI product, enabling vehicles to “see” their surroundings. This functionality empowers drivers to request actions from the AI based on environmental cues, like dialing a number displayed on a billboard.
In a strategic move, SoundHound partnered with Bridgepointe Technologies to facilitate the implementation of its solutions for clients, including major brands like Marriott and Toyota. This partnership could significantly enhance SoundHound’s sales, which are already on a growth trajectory.
Navitas Semiconductor’s Strategic Shift
Navitas specializes in gallium nitride integrated circuits, designed for efficient power conversion and charging. These circuits offer quicker charging times and improved energy efficiency compared to traditional silicon systems.
Such advantages are vital for AI data centers that demand substantial energy for both computing and cooling systems. Consequently, Navitas is optimistic about its potential to attract AI-focused clients. However, there’s a caveat.
Navitas previously relied heavily on sales of mobile components to the Chinese market, which represented 60% of its 2024 revenue. In 2025, the company shifted its focus entirely to the AI sector, leading to a significant drop in sales as the Chinese market sales dwindled. In Q3 2025, revenue fell to $10.1 million from $21.7 million the previous year.
This shift has resulted in a net loss of $19.2 million for Navitas in Q3, prompting management to lower operating costs, which have dropped from $37.6 million to $23.2 million. Nevertheless, the firm anticipates a further decline in Q4 2025 revenues, expecting to report about $7 million compared to $18 million in 2024, with a gradual recovery hoped for in 2026.
Evaluating Investments in SoundHound vs. Navitas
Investing in either SoundHound or Navitas involves a degree of risk. For SoundHound, the investment relies on confidence that the company can maintain its rapid sales growth while managing costs effectively. For Navitas, investors must have faith that its pivot to AI will yield positive results.
Another factor to consider is share-price valuation. Since neither company is currently profitable, the forward price-to-sales (P/S) ratio serves as a measure of how much investors pay for each dollar of expected revenue over the upcoming year.
The accompanying chart indicates that SoundHound’s forward sales multiple is near a yearly low, while Navitas’s is considerably high, suggesting that Navitas might be priced at a premium despite its declining sales.
In the long run, Navitas could become an appealing AI investment, but the current high valuation makes it wise to wait for its Q1 2026 earnings to see if revenue improves from the projected $7 million in Q4 2025. At present, SoundHound stands out as the more favorable stock option, thanks to its low valuation and increasing revenues, making it a more attractive investment opportunity for now.
