Last year, artificial intelligence (AI) stocks went gangbusters. But even the biggest and most dramatic growth stories in history experienced occasional corrections. Over the first two months of 2025, many AI stocks saw a strong pullback in valuation. If you've been waiting to jump in, this looks like your chance. The two companies below look like great long-term buys.
This remains the greatest AI stock of all time
When it comes to AI stocks, few can match the might and growth potential of Nvidia (NVDA 0.48%). There is simply no better stock to play the AI revolution that is currently unfolding. That's because nearly every AI company relies on specialized graphics processing units (GPUs) to train and run their models. GPUs are a critical component for any AI application, and Nvidia has a stranglehold on the market. According to most estimates, it has somewhere between a 70% and 95% market share for AI GPUs.
NASDAQ: NVDA
Key Data Points
Of course, competition will heat up over time, but Nvidia has some impressive competitive advantages. It has the scale and reputation, of course. But the key to Nvidia's success is locking in developers and vendors. In 2006, it launched CUDA, a developer platform that allowed companies and individuals to essentially create customized environments to get the most out of Nvidia's chips. This led to immense performance improvements, but also enmeshed customers deeply into Nvidia's hardware. In essence, this allows it to control both the hardware and software ends of its product.
Nvidia's dominance will likely continue for years to come, even as mounting competition takes away some of its market share. But have no doubt: If you want to invest in the core of the AI revolution, Nvidia remains a top pick, especially with shares losing 13% so far in 2025.
Add some extra growth with this hidden gem
Looking for even more growth? Give SoundHound AI (SOUN +20.16%) consideration.
Unlike Nvidia, SoundHound does not have a stranglehold on its market. It does have a growing list of customers, including Applebee's, Jeep, and Vizio, plus an impressive patent portfolio with more than 200 patents. SoundHound is very early in its journey to AI dominance.
NASDAQ: SOUN
Key Data Points
SoundHound's business specializes in AI applications that deal with sound. Think ordering through an AI at a fast food drive-thru or being routed through an AI agent on a customer call, one you can hardly tell is run by a computer and not an actual human. SoundHound's management team thinks the voice AI space will eventually be worth $140 billion or more, though the current size is just a tiny fraction of that figure. The company has a great start piloting its technology with several dozen notable brands, but there will be steep competition over time, especially from better-financed big tech companies.
It's this long-term competitive risk that leaves SoundHound with a diminutive $3.8 billion market cap. That's following a 51% fall in the share price since the year began. The drop stemmed from several factors: an overstretched valuation, a marketwide dip in AI stocks, deepening operating losses, and the complete liquidation of 1.7 million shares by Nvidia, a stake it purchased only last year.
There's no doubt that SoundHound is a speculative growth investment right now. But if you're looking for maximum growth potential, the recent pullback may have provided you with a buying opportunity.
