In the fast-evolving technology sector, Shopify Inc. and SoundHound AI, Inc. represent two dynamic players redefining their markets through innovation. Shopify leads in commerce platforms, empowering merchants worldwide, while SoundHound pioneers voice AI solutions across industries. Both companies share a commitment to cutting-edge software applications, making their comparison compelling. Join me as we analyze their strengths and growth prospects to uncover which stock holds the most promise for your investment portfolio.
Table of contents
Companies Overview
I will begin the comparison between Shopify and SoundHound by providing an overview of these two companies and their main differences.
Shopify Overview
Shopify Inc. is a commerce company headquartered in Ottawa, Canada, offering a comprehensive platform that enables merchants to manage and sell products across multiple channels, including web, mobile, and physical retail. It provides tools for inventory management, order processing, payments, fulfillment, marketing, and analytics. Established in 2004, Shopify serves a global market with a strong focus on empowering businesses through its technology.
SoundHound Overview
SoundHound AI, Inc., based in Santa Clara, California, develops a voice artificial intelligence platform designed to create conversational experiences for businesses. Its flagship product, the Houndify platform, provides tools such as automatic speech recognition, natural language understanding, and custom voice assistants. Founded recently relative to Shopify, SoundHound focuses on voice AI solutions for diverse industries to enhance customer interaction.
Key similarities and differences
Both Shopify and SoundHound operate in the technology sector, specifically within software applications, and are listed on NASDAQ. While Shopify’s business model centers on e-commerce platform solutions enabling sales and merchant services, SoundHound’s model targets voice AI technology for conversational interfaces. They differ significantly in scale, with Shopify having a market cap around 205B USD and a larger workforce, whereas SoundHound’s market cap is near 4.75B USD with fewer employees.
Income Statement Comparison
This table presents a side-by-side comparison of the most recent fiscal year income statement metrics for Shopify Inc. and SoundHound AI, Inc., reflecting their financial performance in 2024.
| Metric | Shopify Inc. (SHOP) | SoundHound AI, Inc. (SOUN) |
|---|---|---|
| Market Cap | 205B | 4.8B |
| Revenue | 8.88B | 85M |
| EBITDA | 1.34B | -329M |
| EBIT | 1.30B | -348M |
| Net Income | 2.02B | -351M |
| EPS | 1.56 | -1.04 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Shopify Inc.
Shopify’s revenue and net income have shown strong growth from 2020 to 2024, with revenue increasing from $2.9B to $8.9B and net income rising from $320M to $2.0B. Margins improved significantly, with a gross margin of 50.36% and net margin of 22.74% in 2024. The latest year marked a robust rebound, with revenue growth accelerating by 25.78% and net margin more than doubling, reflecting improved profitability.
SoundHound AI, Inc.
SoundHound’s revenue grew considerably from $13M in 2020 to $85M in 2024, an 84.62% increase in the latest year. However, net income remained negative, with a $351M loss in 2024 despite some margin improvements. The gross margin stood at 48.86%, but EBIT and net margins were deeply negative, indicating ongoing challenges in controlling expenses and achieving profitability, particularly with high interest expenses.
Which one has the stronger fundamentals?
Shopify exhibits stronger fundamentals with consistent revenue and net income growth, favorable margins, and positive EBIT. In contrast, SoundHound, despite strong revenue growth, suffers from large net losses and unfavorable EBIT and net margins, compounded by significant interest expenses. Shopify’s income statement presents a more stable and profitable financial position over the evaluated period.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for Shopify Inc. (SHOP) and SoundHound AI, Inc. (SOUN) based on their most recent fiscal year data from 2024.
| Ratios | Shopify Inc. (SHOP) | SoundHound AI, Inc. (SOUN) |
|---|---|---|
| ROE | 17.5% | -191.9% |
| ROIC | 7.5% | -68.1% |
| P/E | 68.2 | -19.1 |
| P/B | 11.9 | 36.8 |
| Current Ratio | 3.71 | 3.77 |
| Quick Ratio | 3.70 | 3.77 |
| D/E (Debt-to-Equity) | 0.097 | 0.024 |
| Debt-to-Assets | 8.1% | 0.8% |
| Interest Coverage | 0 | -28.1 |
| Asset Turnover | 0.64 | 0.15 |
| Fixed Asset Turnover | 63.4 | 14.3 |
| Payout ratio | 0 | 0 |
| Dividend yield | 0 | 0 |
Interpretation of the Ratios
Shopify Inc.
Shopify shows a mix of ratio strengths and weaknesses in 2024. Favorable ratios include net margin at 22.74% and ROE at 17.47%, signaling profitability and shareholder returns, while the high P/E of 68.18 and P/B of 11.91 are less favorable, indicating potential overvaluation. The company pays no dividends, likely reinvesting earnings to fuel growth and innovation.
SoundHound AI, Inc.
SoundHound’s 2024 ratios indicate significant financial challenges, with deeply negative net margin (-414.06%) and ROE (-191.99%), alongside poor returns on invested capital. The high P/B ratio of 36.76 and negative interest coverage reflect risk, although a low debt-to-equity ratio is positive. Like Shopify, SoundHound does not pay dividends, focusing on development and expansion.
Which one has the best ratios?
Shopify presents a more favorable and balanced ratio profile, with profitability and return metrics supporting its business model despite valuation concerns. SoundHound’s ratios predominantly reflect losses and operational inefficiencies, indicating higher financial risk. Therefore, Shopify’s ratios are comparatively stronger in this assessment.
Strategic Positioning
This section compares the strategic positioning of Shopify Inc. and SoundHound AI, including market position, key segments, and exposure to technological disruption:
Shopify Inc.
- Large market cap of 205B USD, facing tech sector volatility and strong competition.
- Diversified revenue from merchant solutions and subscription services driving growth.
- Operates in commerce platform tech with moderate exposure to disruption in e-commerce tools.
SoundHound AI, Inc.
- Smaller market cap of 4.75B USD, exposed to high competition in AI voice technology.
- Concentrated revenue mainly from hosted services, licensing, and professional services.
- Positioned in voice AI, highly exposed to rapid technological advances and innovation risks.
Shopify Inc. vs SoundHound AI, Inc. Positioning
Shopify’s approach is diversified across commerce platforms and merchant services, providing multiple business drivers. SoundHound AI focuses on voice AI technology, making its positioning more concentrated and sensitive to innovation cycles. Each strategy carries inherent risks and opportunities as reflected in their market and segment focus.
Which has the best competitive advantage?
Both companies show slightly unfavorable MOAT evaluations due to ROIC below WACC but with growing profitability trends. Shopify’s larger scale and diversified model contrast with SoundHound’s focused niche, yet neither demonstrates a strong durable competitive advantage based on current ROIC metrics.
Stock Comparison
The stock price chart highlights significant bullish trends for Shopify Inc. and SoundHound AI, Inc. over the past year, with decelerating momentum and contrasting recent negative shifts in price and volume dynamics.
Trend Analysis
Shopify Inc. experienced a bullish trend over the past 12 months with a 106.27% price increase, though momentum has decelerated. Recent weeks show a -9.55% decline, indicating short-term weakness despite sustained buyer dominance.
SoundHound AI, Inc. showed a stronger bullish trend with a 186.48% gain over the last year but also faced deceleration. The recent period’s -36.27% price drop reflects increased seller dominance and a notable reversal in short-term performance.
Comparing both, SoundHound AI delivered the highest market performance over the year with a 186.48% gain, outperforming Shopify’s 106.27% increase despite sharper recent volatility and seller pressure.
Target Prices
Analysts present a clear consensus on target prices for Shopify Inc. and SoundHound AI, Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Shopify Inc. | 200 | 140 | 186.24 |
| SoundHound AI, Inc. | 15 | 11 | 13.33 |
The consensus target for Shopify at 186.24 USD suggests moderate upside from the current price of 157.51 USD. SoundHound’s target consensus at 13.33 USD also indicates potential for growth above its current price of 11.31 USD.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Shopify Inc. and SoundHound AI, Inc.:
Rating Comparison
SHOP Rating
- Rating: B, considered Very Favorable by analysts.
- Discounted Cash Flow Score: 3, indicating Moderate value.
- ROE Score: 4, viewed as Favorable for profitability.
- ROA Score: 5, Very Favorable for asset utilization.
- Debt To Equity Score: 3, Moderate financial risk level.
- Overall Score: 3, Moderate overall financial standing.
SOUN Rating
- Rating: C-, also classified as Very Favorable.
- Discounted Cash Flow Score: 1, Very Unfavorable.
- ROE Score: 1, Very Unfavorable for profit efficiency.
- ROA Score: 1, Very Unfavorable for asset use.
- Debt To Equity Score: 4, Favorable low financial risk.
- Overall Score: 1, Very Unfavorable overall rating.
Which one is the best rated?
Based strictly on the provided data, Shopify Inc. holds higher scores in discounted cash flow, ROE, ROA, and overall rating, indicating stronger financial performance. SoundHound AI scores better only on debt-to-equity, showing lower financial risk.
Scores Comparison
Here is a comparison of the financial health scores for Shopify Inc. and SoundHound AI, Inc.:
SHOP Scores
- Altman Z-Score: 50.42, indicating a safe zone with a very low bankruptcy risk.
- Piotroski Score: 6, representing average financial strength.
SOUN Scores
- Altman Z-Score: 6.62, also in the safe zone, suggesting low bankruptcy risk.
- Piotroski Score: 3, categorized as very weak financial strength.
Which company has the best scores?
Shopify has a significantly higher Altman Z-Score and a better Piotroski Score than SoundHound AI. Shopify’s scores indicate stronger financial health and lower bankruptcy risk based on the provided data.
Grades Comparison
Here is a comparison of the recent grades assigned to Shopify Inc. and SoundHound AI, Inc.:
Shopify Inc. Grades
This table summarizes the latest grades from reputable grading companies for Shopify Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Scotiabank | Upgrade | Sector Outperform | 2026-01-08 |
| Wolfe Research | Downgrade | Peer Perform | 2026-01-06 |
| Wells Fargo | Maintain | Overweight | 2025-12-17 |
| Truist Securities | Maintain | Hold | 2025-11-05 |
| CIBC | Maintain | Outperform | 2025-11-05 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-11-05 |
| DA Davidson | Maintain | Buy | 2025-11-05 |
| Scotiabank | Maintain | Sector Perform | 2025-11-05 |
| Needham | Maintain | Buy | 2025-11-05 |
| JP Morgan | Maintain | Overweight | 2025-11-05 |
Shopify’s grades show a mixed but overall positive trend, including upgrades to Sector Outperform and several Buy and Overweight ratings.
SoundHound AI, Inc. Grades
This table summarizes the latest grades from reputable grading companies for SoundHound AI, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | Maintain | Neutral | 2026-01-05 |
| Cantor Fitzgerald | Upgrade | Overweight | 2025-12-12 |
| DA Davidson | Maintain | Buy | 2025-11-18 |
| Piper Sandler | Maintain | Neutral | 2025-11-07 |
| HC Wainwright & Co. | Maintain | Buy | 2025-10-16 |
| HC Wainwright & Co. | Maintain | Buy | 2025-09-17 |
| Wedbush | Maintain | Outperform | 2025-09-11 |
| DA Davidson | Maintain | Buy | 2025-09-10 |
| Ladenburg Thalmann | Upgrade | Buy | 2025-08-11 |
| Wedbush | Maintain | Outperform | 2025-08-08 |
SoundHound AI’s grades indicate steady confidence with multiple Buy and Outperform ratings, and an upgrade to Overweight.
Which company has the best grades?
Both Shopify Inc. and SoundHound AI, Inc. hold a consensus rating of “Buy,” but Shopify shows a broader range of analyst opinions including some Hold and Neutral ratings, whereas SoundHound’s grades mostly reflect Buy and Outperform stances. This suggests SoundHound may currently enjoy stronger analyst confidence, which could influence investor sentiment and portfolio positioning.
Strengths and Weaknesses
Here is a comparison of key strengths and weaknesses for Shopify Inc. (SHOP) and SoundHound AI, Inc. (SOUN) based on their latest financial and operational data:
| Criterion | Shopify Inc. (SHOP) | SoundHound AI, Inc. (SOUN) |
|---|---|---|
| Diversification | Strong service and subscription revenue streams with $6.53B in services and $2.35B in subscriptions (2024) | More concentrated revenue, mainly from Hosted Services ($57.2M), Licensing ($17.6M), and Professional Services ($9.5M) |
| Profitability | Favorable net margin (22.74%) and ROE (17.47%), though ROIC slightly below WACC indicating value shedding | Negative profitability metrics (net margin -414%, ROE -192%, ROIC -68%), indicating significant losses |
| Innovation | High innovation reflected in growing ROIC trend (+514%) and strong asset turnover | Innovation growing with ROIC trend (+57%), but overall financial performance weak |
| Global presence | Large global e-commerce platform with extensive merchant base | Niche AI voice and sound recognition market, limited scale compared to SHOP |
| Market Share | Significant market share in e-commerce solutions, growing subscription and merchant solutions | Smaller market presence, emerging player in AI services |
Key takeaways: Shopify demonstrates solid diversification and profitability with strong growth potential despite current value shedding. SoundHound AI shows promising innovation but struggles with profitability and scale, posing higher investment risk.
Risk Analysis
Below is a comparison table highlighting key risks for Shopify Inc. (SHOP) and SoundHound AI, Inc. (SOUN) based on the latest financial and market data from 2024.
| Metric | Shopify Inc. (SHOP) | SoundHound AI, Inc. (SOUN) |
|---|---|---|
| Market Risk | High beta (2.84), volatile stock range (69.84-182.19) | High beta (2.88), volatile stock range (6.52-22.17) |
| Debt Level | Low debt-to-equity (0.1), low debt-to-assets (8.09%) | Very low debt-to-equity (0.02), very low debt-to-assets (0.79%) |
| Regulatory Risk | Moderate, global commerce exposure | Moderate, operates in AI tech with evolving regulations |
| Operational Risk | Medium, large scale operations with 8,100 employees | Medium-high, smaller scale with 842 employees and emerging tech |
| Environmental Risk | Moderate, global footprint with physical retail elements | Low, mostly digital AI platform |
| Geopolitical Risk | Moderate, exposure to multiple regions including unstable areas | Moderate, US-based but with global AI market exposure |
Shopify’s most impactful risks stem from its high market volatility and valuation concerns, despite strong financial health and low debt. SoundHound faces greater operational and profitability challenges, reflected in unfavorable margins and weak financial scores, increasing risk despite low leverage. Both companies require cautious investment consideration given market and regulatory uncertainties.
Which Stock to Choose?
Shopify Inc. (SHOP) shows a favorable income evolution with strong revenue and net margin growth, supported by solid profitability and low debt levels. Its financial ratios are slightly favorable overall, and it holds a very favorable B rating, reflecting stable financial health despite some valuation concerns.
SoundHound AI, Inc. (SOUN) exhibits a mixed income profile with strong revenue growth but significant net losses and unfavorable profitability metrics. Its financial ratios are broadly unfavorable, though debt remains low. The company has a very favorable C- rating but weak overall scores, signaling financial challenges.
For investors, SHOP might appear more suitable for those seeking quality and stability given its favorable income and financial ratios, while SOUN could be considered by growth-oriented investors willing to tolerate higher risk due to its volatile earnings and unfavorable ratios. The choice could depend significantly on individual risk tolerance and investment strategy.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Shopify Inc. and SoundHound AI, Inc. to enhance your investment decisions:
