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Shares surged in September in the wake of Wall Street analyst upgrades, such as Deutsche Bank setting a price target of $200. But Astera’s strong business performance justified those analyst moves.

The company generated record third-quarter revenue of $230.6 million, an impressive 104% year-over-year increase. This helped Astera achieve quarterly net income of $91.1 million, a vast improvement over its net loss of $7.6 million in the prior-year period.

That success was driven by demand for its data center components, which enable AI systems to operate with greater speed and efficiency. To further strengthen its offerings, the company is acquiring aiXscale Photonics, a German specialist in optical-glass coupling technology. That will give Astera the ability to provide the high-bandwidth, low-power solutions needed by customers as AI tech infrastructure expands to data centers the size of small cities.

Both SoundHound and Astera Labs have benefited from the AI megatrend. But while both companies delivered revenue increases in the third quarter, looking out over a longer time frame provides an important insight for comparing them: Astera has experienced the stronger sales growth over time.

Adding to this is the fact that Astera is profitable. SoundHound is not: In the third quarter, it booked an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $14.5 million. However, management believes it can reach profitability on an adjusted EBITDA basis in the near future.

In terms of valuation, both companies are at about the same level when viewed through the lens of their price-to-sales ratios. This metric measures how much investors are willing to pay for every dollar of revenue produced over the trailing 12 months, and is commonly used to gauge the values of companies that are unprofitable, such as SoundHound.

SoundHound’s valuation soared early in 2025, and that contributed to its share price drop as the year progressed. Now, its valuation is more reasonable.

However, considering Astera has about the same sales multiple, yet is a profitable business with stronger revenue growth over time, it is the superior AI stock to invest in today.

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Robert Izquierdo has positions in SoundHound AI. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.

Better Artificial Intelligence Stock: SoundHound AI vs. Astera Labs was originally published by The Motley Fool