Artificial intelligence (AI) captured investors' attention this year when OpenAI's online chatbot, ChatGPT, gave the world a glimpse of the technology's capabilities. Companies have since clamored to get their hands on generative AI tools to boost productivity and transform customer experiences. 

It sparked a race among start-ups and tech-sector leaders alike to fill their data centers with semiconductor hardware powerful enough to develop, train, and deploy AI. Chip giant Nvidia has been the primary beneficiary of that demand wave, and investors have sent its stock soaring by more than 200% this year so far. 

But there is more than one way to play the AI boom, and some companies operating in this space are still flying under the radar. Opera Limited (OPRA 0.89%) and SoundHound AI (SOUN -0.11%) are two great examples. They're still relatively small companies and carry a higher degree of risk than established players like Nvidia, but each has significant potential.

Both stocks are lightly covered by Wall Street, but the analysts who have issued price targets appear extremely bullish. Here's why.

Opera Limited: Implied upside of 66%

Opera stock is having a big year already with a gain of 111% so far. The company has developed a unique internet browser with more built-in functions than competing platforms like Alphabet's Google Chrome or Microsoft Edge.

As of the recent 2023 second quarter (ended June 30), Opera had amassed over 1 billion downloads with 316 million monthly active users.

Its flagship browser comes with an ad blocker, VPN, messaging function, and even a native crypto wallet, all of which are standard features with no plug-ins required. But it also now comes with built-in generative AI tools powered by a combination of Opera's in-house AI model called ARIA, and OpenAI's ChatGPT.

Users can prompt Opera with queries and receive direct answers, reducing their reliance on search engines like Google. And it can generate text summaries, translate content, and even write social media posts for users, which are other features generative AI has become known for.

In its second-quarter presentation to investors, Opera said 74% of its new customers are acquired organically, which means it doesn't have to rely on costly marketing to fuel growth. As a result, the money it does spend on advertising is solely focused on high-value users, and this strategy has helped the company grow its average revenue per user threefold over the last four years, to $1.17.

In the second quarter, the company generated $94.1 million in total revenue, which represented 21% growth year over year -- the 10th consecutive quarter it grew revenue by more than 20%. It was also profitable, with $13.5 million in net income, taking its 2023 total to date to $29 million.

Since Opera is making money, it's returning capital to shareholders through share buybacks and dividends. It will pay out two issuances of $36 million in dividends in 2023, with the first in June.

The Wall Street Journal tracks just three analysts covering Opera stock right now, and they have all given it the highest-possible buy rating. They have an average price target of $21, which implies an upside of 66% from where it trades as of this writing.

Opera is still a small company with a valuation of just $1.1 billion, so investors should expect volatility if they choose to buy in. While its stock has more than doubled in 2023, it's also down over 50% from its all-time high, which was set just two months ago.

SoundHound AI: Implied upside of 123%

Shares of SoundHound AI have jumped 73% so far in 2023 on the back of investors' growing interest in AI. The company is a specialist in a generative AI subfield called conversational AI, which involves developing chatbots capable of recognizing -- and responding with -- spoken voice.

SoundHound's technology has already been adopted by hundreds of businesses across the hospitality and automotive sectors.

For example, a restaurant can use SoundHound's conversational AI to answer 100% of its phone calls. It can accept orders or answer basic questions about opening hours and its location. But the technology can also be used to handle orders from customers dining in the restaurant, in addition to those using the drive-thru.

Following its success in the hospitality industry, SoundHound is now rolling out a platform called Smart Answering to suit all business types, which will significantly expand its addressable market. 

The company's technology is also used by leading car manufacturers including Mercedes-Benz and Honda. Drivers can pose a variety of queries to their in-car voice assistant to help with navigation, find information about the weather, or even roll the vehicle's windows up or down.

SoundHound is valued at just $546 million as of this writing. In the recent second quarter (ended June 30), it only generated $8.8 million in revenue, though that was an impressive 42% increase compared to a year ago. While the company is still scaling up, there is a constant stream of demand coming from customers; it currently has an order backlog worth $339 million, which has grown by 20% over the past year.

But buying SoundHound stock comes with risk. The company has $115 million in cash on hand, and it made a net loss of almost $22 million in the second quarter.

While it's working to bring those losses down, there's almost no question it will need another cash injection at some point. Scaling a technology business can become a very capital-intensive exercise.

The Wall Street Journal is tracking just three analysts covering SoundHound stock at the moment. All of them have given it the highest-possible buy rating, and they have a consensus price target of $5.07 which implies potential upside of 118% from where it trades as of this writing.

Given the company's impressive customer list and its growing order backlog, its stock presents an enticing risk/reward proposition.