When you look at the double- and triple-digit gains that artificial intelligence (AI) stocks have posted as of late, you might think the opportunity to invest in them is over. But it’s important to remember that we are in the early days of the AI growth story. According to Statista, only about 16% of companies mentioned AI in last year’s earnings calls, implying there is plenty of room for companies serving the AI market to gain new customers and increase revenue. And speaking of the market, it is expected to surpass $1 trillion by the end of the decade.
All of this means that many of the current AI stocks (whether or not they’ve risen in the last few months or years) have a lot of potential to make major breakthroughs in the future. Let’s take a look at two that have what it takes to go parabolic.
1. Intel
Intel (NASDAQ: INTC) It missed out on the initial AI boom as the chipmaker fell behind in this high-growth market. Intel, known for its central processing units (CPUs), remains the leader in personal computing power. However, a slowdown in PC demand of late represented another headwind for the company and the stock.
However, things are changing quickly thanks to Intel’s determination to become a force in the AI market. Late last year, the company launched a portfolio of new AI products and recently announced the upcoming launch of its Gaudi 3 AI accelerator, one that can even outperform market giant Nvidia’s leading chip when used in certain large language models. Intel didn’t provide a price range for the Gaudi 3, but the announcement implied that it’s considerably cheaper than Nvidia’s H100.
Many companies launching AI products may like this combination of strong performance and lower price, which means Intel could start to gain more and more market share.
Meanwhile, Intel is also working toward its goal of becoming the second-largest chip producer by 2030 by opening its manufacturing network to others. Demand for AI chips and the United States’ interest in becoming a player in the foundry business could help put this effort on the path to success.
Trading on 26x forward earnings estimates, Intel looks like a very reasonable buy right now, considering these two revenue drivers could boost earnings (and share price) over the next few years.
2. SoundHound AI
SoundHound AI (NASDAQ: SOUND) believes that voice AI will be the next disruptive technology in computing and plans to secure its leadership there. The company offers companies, such as restaurants and automakers, the ability to use its technology to improve their offerings. For example, SoundHound’s voice assistant takes food orders and voice-enabled cars can follow drivers’ commands.
Traditionally, voice AI technologies have “translated” speech into text before determining the meaning of the words. But SoundHound gains efficiency and precision with its technology that translates speech directly into meaning. The company has obtained more than 120 patents to protect its technology; about 140 more are pending. This, along with the complexity of developing voice technology, could give the company a competitive advantage.
This voice AI innovator reported 80% increases in revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the most recent quarter, so clearly, the company has shown that it has the potential to be a winning growth stock. Of course, it’s important to note that SoundHound is still small, with revenue of $17 million for the quarter. But the company’s subscriptions and order book of $661 million are encouraging and show strong demand for its technology.
SoundHound stock has advanced recently, but is still far from its previous peak, even as revenue has continued to rise. Of course, as a young company, SoundHound comes with risks. But if this dynamic player continues to increase orders and move toward profitability, the stock could soar.
Should you invest $1,000 in Intel right now?
Before you buy Intel stock, consider this:
He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and Intel was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $526,933!*
Stock Advisor provides investors with an easy-to-follow success plan, including guidance on how to build a portfolio, regular analyst updates, and two new stock picks each month. He Stock Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
See the 10 actions »
*Stock Advisor returns from April 15, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: long $45 January 2025 calls on Intel and short $47 May 2024 calls on Intel. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks That Could Go Parabolic was originally published by The Motley Fool
#Artificial #Intelligence #Stocks #Parabolic