Head-To-Head Review: Synopsys (NASDAQ:SNPS) and SoundHound AI (NASDAQ:SOUN)

SoundHound AI (NASDAQ:SOUN) and Synopsys (NASDAQ:SNPS) are both technology companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for SoundHound AI and Synopsys, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SoundHound AI	1	3	4	1	2.56
Synopsys	1	5	12	0	2.61

SoundHound AI presently has a consensus target price of $13.60, indicating a potential upside of 107.00%. Synopsys has a consensus target price of $561.28, indicating a potential upside of 43.17%. Given SoundHound AI’s higher possible upside, research analysts plainly believe SoundHound AI is more favorable than Synopsys.

Insider & Institutional Ownership

19.3% of SoundHound AI shares are held by institutional investors. Comparatively, 85.5% of Synopsys shares are held by institutional investors. 8.8% of SoundHound AI shares are held by company insiders. Comparatively, 0.6% of Synopsys shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares SoundHound AI and Synopsys’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SoundHound AI	-67.45%	-30.22%	-20.28%
Synopsys	11.43%	6.24%	3.95%

Valuation and Earnings

This table compares SoundHound AI and Synopsys”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SoundHound AI	$203.20 million	14.36	-$14.01 million	($0.38)	-17.29
Synopsys	$9.42 billion	7.98	$1.33 billion	$5.66	69.26

Synopsys has higher revenue and earnings than SoundHound AI. SoundHound AI is trading at a lower price-to-earnings ratio than Synopsys, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

SoundHound AI has a beta of 2.66, meaning that its stock price is 166% more volatile than the S&P 500. Comparatively, Synopsys has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500.

Summary

Synopsys beats SoundHound AI on 10 of the 15 factors compared between the two stocks.

About SoundHound AI

SoundHound AI, Inc. develops independent voice artificial intelligence (AI) solutions that enables businesses across automotive, TV, and IoT, and to customer service industries to deliver high-quality conversational experiences to their customers. Its products include Houndify platform that offers a suite of Houndify tools to help brands build conversational voice assistants, such as Application Programming Interfaces (API) for text and voice queries, support for custom commands, extensive library of content domains, inclusive software development kit platforms, collaboration capabilities, diagnostic tools, and built-in analytics; SoundHound Chat AI that integrates with knowledge domains, pulling real-time data like weather, sports, stocks, flight status, and restaurants; and SoundHound Smart Answering is built to offer customer establishments custom AI-powered voice assistant. The company's products also include CaiNET software that uses machine learning to enhance how domains work together to handle queries; CaiLAN software that arbitrates responses so users get answers from the right domain; Dynamic Interaction a real-time, multimodal customer service interface; Smart Ordering which offers an easy-to-understand voice assistant for restaurants; Employee Assist; automatic speech recognition; natural language understanding; wake words; custom domains; text-to-speech; and embedded voice solutions. The company was founded in 2005 and is headquartered in Santa Clara, California.

About Synopsys

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It operates in three segments: Design Automation, Design IP, and Software Integrity. The company offers Digital and Custom IC Design solution that provides digital design implementation solutions; Verification solution that offers virtual prototyping, static and formal verification, simulation, emulation, field programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. It also provides intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, MIPI, HDMI, and Bluetooth low energy applications; logic libraries and embedded memories; processor cores, software, and application-specific instruction-set processor tools for embedded applications; security IP solutions; IP solutions for automotive market; and system-on-chip (SoC) infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating-point components, and Arm AMBA interconnect fabric and peripherals. In addition, the company offers HAPS FPGA-based prototyping systems; virtual prototyping solutions; and Platform Architect solutions for SoC architecture analysis and optimization, as well as optical products, and mechatronic simulations. Further, it provides security and quality testing products, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle, as well as manufacturing solutions. Additionally, the company provides intelligent orchestration solution, software risk manager, and black duck software composition analysis tools. It serves electronics, financial services, automotive, medicine, energy, and industrial areas. The company was incorporated in 1986 and is headquartered in Sunnyvale, California.