The stock market has a long history of creating wealth for investors. Companies that have a record of strong growth with expanding market potential for their products are the ones that can generate lasting wealth for shareholders.
Here are two companies doing exciting things that could produce wealth-building returns.
1. Tesla
Tesla (TSLA 0.88%) stock delivered incredible returns over the last 12 years. A $1,000 investment when the company was just launching the first in its lineup of Model S, 3, X, and Y vehicles would be worth $160,000 right now.
Electric cars currently generate nearly 80% of the company's $97 billion in trailing-12-month revenue. However, much of Tesla's fourth-quarter earnings call centered on topics like artificial intelligence (AI) and robotics, which signals where the company plans to focus its growth.
NASDAQ: TSLA
Key Data Points
Tesla's AI investments are paving the way for a new slate of products and services that could be worth more than its electric car business. In June, Tesla is planning to launch unsupervised full self-driving robotaxis in Austin, Texas. It also expects to begin producing the first several thousand Optimus robots, which could see tremendous demand from the industrial sector over the long term.
Optimus could have an incredible impact on economic growth, since robots don't get tired working around the clock in a factory. Tesla will have a major advantage, given the head start it has training AI for its self-driving cars. Assuming Tesla is able to drive down costs and scale production to a level that can meet massive demand, CEO Elon Musk sees the potential for Optimus to generate over $10 trillion in revenue over the long term.
Even more conservative projections are pointing to a big revenue opportunity. For example, Goldman Sachs expects the addressable market for humanoid robotics to reach $38 billion by 2035.
Other analysts see Tesla's robotaxi service as its biggest profit opportunity. For example, Ark Invest believes up to 90% of Tesla's enterprise value could derive from the profit of its robotaxi (Cybercab) service by 2029.
It's for these reasons that Tesla stock still offers significant return potential. It could be at the beginning of unlocking tremendous value from its AI capabilities.
2. SoundHound AI
SoundHound AI (SOUN 2.28%) is another innovative company with enormous growth potential. The stock rocketed over 900% in the last 12 months, but with a market cap of just $6.3 billion at the time of writing, there is still a lot of upside potential for this fast-growing company.
NASDAQ: SOUN
Key Data Points
The stock soared last year after the company's revenue jumped 89% year over year in the third quarter. This comes after the company completed the acquisition of Amelia, which is helping SoundHound expand its conversational voice technology across several industries like retail and financial services.
The company is on a mission to allow people to interact with products and services as easily as talking to another person. It recently signed deals with 10 globally recognized fast-food restaurant companies last quarter, and it is working with AI chip leader Nvidia to allow on-device voice AI processing without needing to be connected to the cloud.
SoundHound is not generating a profit right now, but management is guiding for positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2025. Over the long term, investors should expect the company's margins to improve, since it has multiple ways to monetize its technology across subscriptions, royalties, and revenue-sharing agreements.
The AI voice market is expected to grow from $3 billion in 2024 to $20 billion in 2030, according to Markets and Markets. SoundHound's growing list of companies using its technology indicates it is the leader, which could spell outstanding returns.
