Track market-moving stories before they get noisy

Key Takeaways Five9 offers profitable AI growth, stronger cash flow and a more balanced risk-reward profile.SoundHound's revenues rose 52%, but losses and LivePerson integration add execution risk.Five9 trades at 1.33X forward sales versus SoundHound's 10.49X, despite positive cash flows. Artificial intelligence is rapidly transforming customer engagement as enterprises adopt conversational AI, intelligent virtual agents and automation to improve customer experience while lowering service costs. Companies that can deliver scalable, enterprise-grade AI platforms are expected to benefit from this multiyear technology shift. SoundHound AI (SOUN - Free Report) and Five9 (FIVN - Free Report) are among the companies capitalizing on this opportunity, but they approach the market from different angles.

SoundHound has evolved into a voice-first, agentic AI platform serving industries ranging from automotive and restaurants to financial services, while Five9 remains a leader in cloud contact center software that is embedding AI across its customer experience 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 StockSoundHound continues to position itself as one of the fastest-growing pure-play conversational AI companies. In the first quarter of 2026, revenues increased 52% year over year, while its core Automotive and IoT AI business grew 88%, excluding acquisitions, highlighting robust underlying demand. The company also unveiled OASYS, its self-learning agentic AI platform that enables enterprises to build, deploy and continuously improve AI agents across voice, text, chat, kiosks and other customer touchpoints.

The pending acquisition of LivePerson represents another major growth catalyst. The transaction is expected to create one of the industry's largest conversational AI customer bases, spanning 25 Fortune 100 companies and more than 30 countries. Management expects substantial cross-selling opportunities by combining SoundHound's voice AI with LivePerson's digital messaging capabilities, while projecting a long-term revenue opportunity of roughly $500 million from the combined customer base.

Beyond acquisitions, SoundHound continues to expand across restaurants, automotive, financial services, healthcare, telecommunications and retail. Management highlighted increasing enterprise wins, growing adoption of Voice Insights analytics and strong customer ROI from its AI-powered drive-thru solutions. The company also ended the quarter with $216 million in cash and no debt, providing flexibility to fund future expansion.

Nevertheless, the investment case still carries meaningful risks. The company remains unprofitable, with negative adjusted EBITDA and operating cash flow. Integrating LivePerson while simultaneously investing heavily in proprietary AI models could pressure margins further if anticipated revenue synergies take longer than expected to materialize.

The Case for Five9 StockFive9 offers investors a more mature AI story built on a profitable cloud contact center platform. Rather than pursuing rapid acquisitions, the company has focused on integrating generative AI into its existing intelligent customer experience platform while maintaining disciplined financial execution.

First-quarter 2026 results reflected that strategy. Revenues increased 9% year over year to $305 million, while subscription revenues accelerated 13%. More importantly, adjusted EBITDA rose 41%, operating cash flow increased 32% and free cash flow climbed 42%, demonstrating continued operating leverage. Dollar-based retention rates of 105% overall and 107% for subscription customers indicate that existing clients continue expanding their usage of the platform.

Five9 is also strengthening its competitive position through AI Agents, GenAI Studio and partnerships such as its enterprise AI solution with Google Cloud. Management believes AI significantly expands its addressable market by extending beyond cloud contact center software into AI-driven labor automation, creating a substantially larger long-term opportunity.

Financial discipline further strengthens the investment thesis. During the latest quarter, Five9 announced a new $200 million share repurchase authorization after completing the remaining balance of its previous program, highlighting confidence in future cash generation. The company also reaffirmed its full-year outlook despite macroeconomic uncertainty.

The primary challenge is moderating growth. Revenue expansion has slowed into the high-single digits as the company has matured. Management also acknowledged that AI could gradually reduce traditional subscription revenues if newer AI offerings fail to fully offset evolving customer purchasing patterns.

Five9 Has Outperformed in the MarketThe market has rewarded Five9's improving profitability while remaining cautious toward SoundHound's higher-risk growth strategy. Five9 shares have gained 15.3% year to date (YTD), outperforming both the Zacks Computer and Technology sector, which has advanced 9.7%, and the S&P 500, up 7.5%. In comparison, SoundHound shares have plunged 38.2% over the same period.

SOUN vs FIVN Price Performance (YTD)

Image Source: Zacks Investment Research

Among comparable enterprise AI and customer experience software companies, Cisco Systems (CSCO - Free Report) has surged 68.1% YTD as investors increasingly recognize its AI networking opportunity. Meanwhile, NICE Ltd. (NICE - Free Report) has lost 47% amid softer demand for customer experience software and competitive pressures. While SoundHound has significantly lagged Five9 and Cisco, it has performed better than NICE.

SoundHound Commands the Premium MultipleThe valuation gap between the two companies reflects their contrasting business models and investor expectations. On a forward 12-month price-to-sales basis, SoundHound trades at 10.49X, well above the Zacks Computer and Technology sector average of 6.18X, suggesting investors continue to price in substantial long-term AI growth despite ongoing losses. Five9, by comparison, trades at just 1.33X forward sales despite generating positive earnings and cash flows.

SOUN vs FIVN Valuation (P/S F12M)

Image Source: Zacks Investment Research

Peer valuations reinforce this contrast. Cisco Systems trades at 6.65X forward sales, reflecting confidence in its expanding AI portfolio, while NICE trades at 1.57X. Five9 therefore trades at a discount to both Cisco and NICE despite improving profitability and expanding AI capabilities, whereas SoundHound remains the most expensive stock in the group, leaving relatively little room for execution disappointments.

Estimate Trends Favor Five9Analysts' earnings expectations further separate the two companies. For SoundHound, the Zacks Consensus Estimate for 2026 remains unchanged over the past 60 days at a loss of 15 cents per share, wider than last year's reported loss of 13 cents. Revenues are still projected to increase 38% in 2026, followed by another 15.8% growth in 2027, underscoring robust top-line momentum despite continuing losses.

SOUN Estimate

Image Source: Zacks Investment Research

Five9 presents a more balanced outlook. The Zacks Consensus Estimate for 2026 earnings has remained unchanged at $3.26 per share over the past 60 days, while the 2027 estimate has increased to $3.79 from $3.77. Analysts expect 2026 revenue growth of 9.7%, followed by another 10.1% increase in 2027, while earnings are projected to grow 10.1% in 2026 and 16.2% in 2027. These revisions point to improving profitability supported by disciplined execution.

FIVN Estimate

Image Source: Zacks Investment Research

Which Stock Offers Better Growth?Both companies are positioned to benefit from rising enterprise adoption of conversational AI, but they appeal to different investor profiles. SoundHound offers the more aggressive growth story. Its rapidly expanding enterprise pipeline, proprietary OASYS platform and pending LivePerson acquisition could substantially expand its addressable market over the next several years. However, the company still faces meaningful execution, integration and profitability risks.

Five9 offers a more balanced investment proposition. The company combines consistent recurring revenue, improving margins, healthy cash generation, disciplined capital allocation and expanding AI capabilities at an attractive valuation. Its improving earnings outlook further strengthens the investment case.

Since both stocks currently carry a Zacks Rank #3 (Hold), Five9 appears to offer the better growth opportunity today. While SoundHound could ultimately generate stronger long-term revenue growth, Five9's combination of profitable expansion, valuation support, stronger share price momentum and improving earnings visibility provides a more compelling risk-reward profile for investors seeking exposure to the customer AI market.

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