Experts working with this technology say that artificial intelligence (AI) will bring new services that people can’t imagine living without. Investing early in the companies behind AI-related breakthroughs can yield excellent returns in the years to come.
Now is the time to start your AI stock search. To help you in that search, here are two AI stocks that could be poised to soar for those who get in early.
1. SoundHound AI
SoundHound AI (NASDAQ: ZOE) is a promising AI stock with a market cap of just $1.8 billion, and the company continues to see increased demand for its voice AI technology. SoundHound’s trailing revenue has exploded from $20 million to $55 million over the past two years. The company just reported another strong quarter, with revenue growing 54% year-over-year in the second quarter.
Voice assistants are going to be an area that will see incredible breakthroughs as AI becomes more advanced in the coming years. SoundHound is establishing itself as a leader in this subsector. It has already partnered with Nvidia to bring in-vehicle speech technology to the Drive platform of the market leader in AI chips.
SoundHound has deals with several companies in the automotive and restaurant industries, signaling validation of its AI capabilities. It recently acquired Amelia, a leader in enterprise AI software that will expand SoundHound’s reach into new industries including retail, financial services, and healthcare.
The company is still reporting losses on the bottom line, but its adjusted net loss narrowed from $20 million in the first quarter to $15 million in Q2. Management expects the company’s operating margin to rise to levels of other software companies, or 30%-plus on annual revenue, over the long term.
You don’t want to wait for SoundHound to hit that earnings target, because by then the stock will have already skyrocketed. If you want to maximize your returns, now is the time to initiate a position.
2. Advanced micro devices
In the future, businesses and consumers will increasingly need powerful computer chips to train AI models and run AI software. This is a substantial growth opportunity for Advanced micro devices (NASDAQ: AMD) — one of the leading suppliers of semiconductors.
AMD is a leading supplier of computer processors and graphics processing units (GPUs) for PCs, data centers, video game consoles and other enterprise markets. Demand for PC chips and data centers has been strong this year, while other markets such as gaming and embedded processors have seen lower revenues.
The recent drop in stock price is a great buying opportunity given AMD’s momentum in the data center sector. AMD’s data center revenue more than doubled in Q2 compared to the same quarter a year ago, and it’s also seeing strong demand for its Ryzen family of central processing units (CPUs).
AMD just made a major acquisition to expand its reach into the $400 billion data center chip market. It paid $4.9 billion in a cash and stock deal to buy ZT Systems, a leader in AI infrastructure. This gives AMD valuable design and cloud computing services that will complement its chip business and strengthen its AI solutions.
Demand for AI chips is expected to explode through the end of the decade as companies upgrade existing data center infrastructure and build more. AMD is already a profitable company, with $1.3 billion in net income on $23 billion in revenue, so it’s a relatively safe growth stock to buy for the long term.
Wall Street analysts expect AMD to grow its earnings per share by 43% annually over the next few years, which could provide investors with great returns. The stock’s recent pullback is a good time to start investing in AMD before more growth could potentially send the stock higher in 2025.
Should You Invest $1,000 in SoundHound AI Now?
Before you buy shares in SoundHound AI, you should consider the following:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and SoundHound AI wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $769,685!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of August 26, 2024
John Ballard has positions in Advanced Micro Devices, Nvidia, and SoundHound AI. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
2 AI Stocks to Buy Before It’s Too Late was originally published by The Motley Fool
