Artificial intelligence (AI) went viral in 2023 and took the stock market along for the ride. The tech-heavy Nasdaq Composite helped lead the charge, soaring 43% last year. Stocks that are focused on advances in generative AI booked some of the most notable gains, and it appears that trend could continue in 2024.

The accelerating adoption of generative AI brings with it the promise of significant productivity gains. By automating certain processes, these algorithms can help make workers more productive. Its uses include generating updates from meetings, creating slide shows from existing documents, summarizing emails and drafting responses, and writing and debugging computer code.

No one knows for sure how lucrative AI will ultimately be, but estimates are eye-opening. Projections from Morgan Stanley and Goldman Sachs estimate the economic impact at $6 trillion and $7 trillion, respectively, by the end of this decade.

With that as a backdrop, here are two stocks investors should consider buying before they rocket 101% and 182% (or more) over the coming year, according to select Wall Street analysts.

A digital AI brain icon positioned over a semiconductor exchanging information.

Image source: Getty Images.

1. SoundHound AI: Implied upside of 182%

SoundHound AI (SOUN 12.60%) isn't a household name, but it has a long and distinguished history of providing voice and audio AI solutions to its customers.

The company has been at the cutting edge of voice-recognition AI for nearly two decades. What began as a music recognition and discovery app soon evolved into the leading voice recognition software used by a host of business and enterprise customers.

The company is currently focused on the automotive and restaurant industries and recently acquired SYNQ3, extending its market reach and making it the largest provider of voice AI services to restaurants. The company uses its generative AI to provide voice-ordering capabilities for restaurants via drive-thrus, self-serve kiosks, and phone orders.

For example, a collaboration with hamburger chain White Castle yielded drive-thru orders that were processed in under 60 seconds with a 90% order completion rate -- exceeding staff-based benchmarks. This comes at a time when restaurants are struggling to maintain adequate staffing.

In the third quarter, SoundHound AI generated revenue of $13.3 million, up 19% year over year and 52% sequentially. The company isn't yet profitable but is making progress as its $0.09 loss per share improved from a $0.15 loss in the prior-year quarter. Add to that its small market cap of just $453 million as of this writing, and the stock is a bit on the risky side, but it has attracted the attention of Wall Street in a big way.

D.A. Davidson analysts have a buy rating on SoundHound AI and a price target of $5, which suggests potential upside for investors of 182%. The analysts cited the performance of SoundHound's Voice AI platform, which they believe will "set the standard for performance [...] in the voice artificial intelligence market," ultimately capturing substantial market share along the way.

They aren't the only ones. Of the five analysts who issued a rating in December, every single one rated it a buy or strong buy.

Lastly, trading at less than 5 times forward sales, the stock is near its cheapest valuation ever. Investors should consider a stake in the company as a small part of a balanced portfolio.

2. Nvidia: Implied upside of 101%

The accelerating demand for AI solutions over the past year has been astonishing, and Nvidia (NVDA -1.81%) is the poster child for that secular tailwind.

Its graphics processing units (GPUs) are the gold standard for machine learning (an established branch of AI) with 95% of the market, according to market intelligence firm CB Insights. The company leaned into its expertise to usher in the era of generative AI and is capturing a large part of that market as well.

Nvidia recently developed the H200 Tensor Core GPU, specifically to meet the demands of AI. Management says the new superchip delivers nearly double the capacity and 2.4 times more bandwidth compared to its predecessor, the A100.

After generating back-to-back quarters of triple-digit year-over-year growth, the company isn't letting up at all. Nvidia is guiding for its fiscal 2024 fourth-quarter revenue to grow 231% to a record $20 billion, driven by accelerating adoption of AI.

As a result, the stock soared 239% in 2023, but Rosenblatt analyst Hans Mosesmann believes there's more upside ahead. He maintains a buy rating on the stock, with a Street-high price target of $1,100, suggesting the stock could soar 101% from here. Mosesmann said Nvidia's performance is "simply unprecedented and just getting started."

He goes further, suggesting his peers are underestimating the need to modernize data centers, which will require the latest and greatest chips to handle the rigorous demands of AI uses in the cloud. Mosesmann calculates the data-center installed base at $1 trillion, resulting in an unparalleled upgrade cycle. Enter Nvidia, the leading provider of GPUs powering data centers -- with an estimated 95% of that market as well.

Mosesmann isn't alone. Of the 53 analysts with a rating for Nvidia in December, 51 rated it a buy or strong buy, and not one recommended selling.

The stock trades at an extremely reasonable price/earnings-to-growth (PEG) ratio of less than 1, compared to a PEG ratio of more than 2 for the S&P 500. By that measure, which factors in its meteoric growth, it's among the cheapest of all the high-growth AI stocks.

Generative AI is still in its infancy, which suggests a long and profitable road ahead for Nvidia.