When you look at the double- and triple-digit gains artificial intelligence (AI) stocks have posted in recent times, you may think the opportunity to invest in them is over. But it's important to remember that we're in the early days of the AI growth story. Only about 16% of companies mentioned AI in last year's earnings calls, according to Statista, implying there's plenty of room for companies serving the AI market to win new customers and increase revenue. And speaking of the market, it's expected to surpass $1 trillion by the decade's end.
All this means that many of today's AI stocks -- whether they've climbed or not in recent months or years -- have plenty of potential to make major advances in the future. Let's check out two that have what it takes to go parabolic.
Image source: Getty Images.
1. Intel
Intel (INTC -1.63%) missed out on the initial AI boom as the chipmaker fell behind in this high-growth market. Known for its central processing units (CPUs), Intel is still the leader in powering personal computers. However, a slowdown in PC demand in recent times represented yet another headwind for the company and the stock.
Things are changing quickly, though, thanks to Intel's determination to become a force in the AI market. Late last year, the company released a portfolio of new AI products and just recently announced the upcoming release of its Gaudi 3 AI accelerator -- one that can even beat market giant Nvidia's top chip when used on certain large language models. Intel didn't provide a price range for the Gaudi 3, but the announcement did imply it's considerably cheaper than Nvidia's H100.
Many companies launching AI products may like this combination of solid performance and lower price, meaning Intel could start carving out more and more market share.
Meanwhile, Intel is also working toward its goal of becoming the No. 2 chip producer by 2030 by opening its manufacturing network to others. The demand for AI chips and the U.S.'s interest in becoming a player in the foundry business could help put this effort on the road to success.
Trading for 26x forward earnings estimates, Intel looks like a very reasonable buy right now, considering these two revenue drivers could supercharge earnings -- and the stock price -- over the next several years.
2. SoundHound AI
SoundHound AI (SOUN 5.00%) believes voice AI will be the next disruptive technology in computing and plans to secure its leadership there. The company offers businesses, such as restaurants and carmakers, 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 commands from drivers.
Traditionally, voice AI technologies have "translated" speech to text before determining the meaning of the words. But SoundHound wins on efficiency and accuracy with its technology translating speech directly to meaning. The company has secured over 120 patents to protect its technology; about 140 more are pending. This, along with the complexity of building voice technology, could offer 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 it has the potential to be a winning growth stock. Of course, it's important to keep in mind that SoundHound is still small, with revenue of $17 million in the quarter. But the company's subscriptions and order backlog of $661 million are encouraging, showing strong demand for its technology.
SoundHound shares have advanced recently, but they're still far from their past peak -- even as revenue has continued to climb. Of course, as a young company, SoundHound comes with risk. But if this dynamic player continues to grow orders and progress toward profitability, the shares could skyrocket.
