SoundHound AI, Inc.SOUN and Cerence Inc.CRNC are prominent players in conversational and voice artificial intelligence. SoundHound is building a diversified voice and agentic AI platform spanning enterprises, restaurants, automotive, healthcare and other industries, while Cerence remains deeply rooted in automotive AI and is expanding its next-generation technology into adjacent markets.
The comparison is increasingly relevant as both companies capitalize on growing demand for generative and agentic AI. SoundHound is pursuing faster growth and broader enterprise adoption, while Cerence is emphasizing profitable growth, recurring connected services and commercialization of its xUI platform.
Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for SoundHound Stock
SoundHound’s growth trajectory remains compelling. Second-quarter 2026 revenues surged 45% year over year to a record $61.9 million, while non-GAAP gross margin was 58.4%. Adjusted EBITDA loss improved to $9.6 million from $14.3 million a year earlier, and non-GAAP loss narrowed to 2 cents per share.
The OASYS agentic AI platform is emerging as a major catalyst. Management said that OASYS has accelerated enterprise deals and helped SoundHound expand across financial services, healthcare, telecommunications and restaurants. The company’s restaurant footprint continues to broaden, while Voice Commerce opens another opportunity through in-vehicle and connected-device transactions. Its proprietary Polaris speech foundation model and specialized AI models should also improve control, efficiency and potentially margins over time.
SoundHound’s pending acquisition of LivePerson could substantially expand its enterprise footprint and strengthen its omnichannel conversational AI capabilities. The company expects the transaction to close before year-end after securing key regulatory clearances. SoundHound also raised its 2026 revenue outlook to $230-$260 million. Its balance sheet provides support, with $203 million of cash and no debt at June-end. However, operating cash outflow remains significant, and continued losses, acquisition integration and heavy investment create execution risks.
The Case for Cerence Stock
Cerence offers a more mature financial profile. Fiscal third-quarter 2026 revenues rose 12% year over year to $69.6 million, while adjusted EBITDA increased 50% to $13.5 million. Free cash flow reached $19.6 million, demonstrating Cerence’s stronger current cash-generation profile.
The company’s automotive position remains a key competitive advantage. Cerence technology is represented across roughly half of worldwide auto production on a trailing-12-month basis, providing a large installed base from which to expand connected and next-generation services. Cerence xUI is moving into commercialization, with a new multi-brand Stellantis award and programs involving several major global automakers. Management expects xUI to deliver higher revenue per vehicle and become a more meaningful contributor in fiscal 2027 and beyond.
Connected services are another bright spot, with revenues growing more than 20% in the latest quarter. Cerence is also pushing beyond automotive through agentic AI and its Mobile Work Agent, potentially reducing its dependence on vehicle production over time.
Yet that transition is still developing. Variable license revenues declined in the latest quarter, reflecting lower production volumes and OEM mix, while fixed-license revenue can make quarterly comparisons volatile. Cerence expects xUI and non-automotive initiatives to contribute more materially from fiscal 2027 onward. Encouragingly, management raised full-year free cash flow guidance to $76-$82 million and is balancing investment with debt reduction and a newly authorized share-repurchase program.
Recent Momentum Favors SoundHound Stock
Both stocks have struggled in 2026. SoundHound and Cerence shares have plunged 29.8% and 29.1% year to date (YTD), respectively, compared with a 13.7% decline for the Zacks Computers – IT Services industry. Both have also substantially underperformed the broader Zacks Computer and Technology sector and S&P 500, as shown below.
SOUN vs CRNC Price Performance (YTD)
Image Source: Zacks Investment Research
Near-term momentum, however, favors SoundHound. SOUN has gained 9.2% over the past month, whereas CRNC has lost 8.7%. That divergence suggests investors have responded more positively to SoundHound’s accelerating enterprise AI growth and improved outlook.
SOUN vs CRNC Price Performance (1-Month)
Image Source: Zacks Investment Research
Cerence Stock Holds the Clear Valuation Advantage
On a forward 12-month price-to-sales basis, SoundHound trades at 11.93X versus just 1.16X for Cerence and 12.26X for the industry. SoundHound therefore trades slightly below the industry multiple but commands a massive premium to Cerence.
SOUN vs CRNC Valuation (P/S F12M)
Image Source: Zacks Investment Research
Cerence clearly wins on valuation. Its low sales multiple, positive cash generation and improving profitability offer a greater margin of safety. SoundHound’s richer valuation requires sustained high revenue growth, successful execution of OASYS and continued progress toward profitability. Any growth disappointment could therefore create greater downside risk for SOUN.
Estimate Revisions Give SoundHound an Edge
SoundHound’s estimate trend is encouraging. Over the past 30 days, the Zacks Consensus Estimate for its 2026 loss has narrowed to 16 cents per share from 18 cents. Revenues are projected to rise 41% in 2026. For 2027, SoundHound is expected to post a loss of 13 cents per share on revenues of $273 million, implying another 14.6% top-line increase.
SOUN EPS Estimate Revision Trend
Image Source: Zacks Investment Research
Cerence presents a mixed picture. Its 2026 EPS estimate has risen to 65 cents from 63 cents over the past 30 days, but the 2027 estimate has declined to $1.08 from $1.22. Revenues are expected to grow 24.5% in 2026 before declining 6.8% to $293 million in 2027, although EPS is projected to increase 65.4%. The downward 2027 estimate revision and weaker projected revenue trajectory temper Cerence’s profitability advantage.
CRNC EPS Estimate Revision Trend
Image Source: Zacks Investment Research
SOUN Stock Looks Like the Better Buy
Cerence, currently carrying a Zacks Rank #3 (Hold), wins on valuation, current profitability and free cash flow. Its entrenched automotive position, expanding connected-services business and xUI commercialization provide meaningful long-term opportunities. Management’s improved balance-sheet discipline and capital returns further strengthen the investment case.
SoundHound, however, offers the stronger growth profile. OASYS adoption, diversification across multiple industries, Voice Commerce, proprietary AI models and the pending LivePerson acquisition provide more avenues for expansion. This Zacks Rank #2 (Buy) company’s improving loss estimates and strong recent share-price momentum add to the case. Despite its substantially higher valuation and continued losses, SoundHound’s faster growth, improving earnings outlook and broader agentic AI opportunity give SOUN the edge over CRNC for investors seeking greater upside potential. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).