Last year, artificial intelligence (AI) stocks were skyrocketing in value. Over the first three months of 2025, however, many of these growth superstars saw their valuations cut severely.
If you've been waiting to buy AI stocks at a discount, these two companies are your best bets right now.
Every AI investor should own this stock
If you're adding AI stocks to your portfolio, strongly consider adding Nvidia (NVDA +4.39%). If you already own Nvidia stock, consider buying even more. When it comes to companies that will benefit from the AI revolution, Nvidia is king.
NASDAQ: NVDA
Key Data Points
You may already know why Nvidia is the king of the AI revolution. The company produces GPUs, critical components that make developing, training, and executing AI services possible. Not only is Nvidia a supplier of critical components to the AI industry, but it is in many ways the preferred supplier. Its chips, despite being priced at a premium, can perform better than the competition thanks to early investment by Nvidia's management team. While estimates vary, most peg Nvidia with at least a 90% market share in data center GPUs, one of the biggest verticals to support the AI industry.
Since 2025 began, Nvidia stock fell nearly 20% in value. Shares are still expensive at 21 times sales, but remember: The AI revolution is just getting started. Not only does Nvidia have a heavy lead on the competition, giving it more investable resources to maintain its edge. But it also has impressive vendor lock-in through developer environments like CUDA, an architecture that allows customers to customize Nvidia chips to their specific needs, making it more likely that they will stick with Nvidia's ecosystem.
With sales expected to grow by 57% this year and another 24% next year, Nvidia stock is still "cheap" for investors willing to stomach the upfront premium, allowing long-term growth rates to make that premium look like a steal in hindsight.
Get maximum growth with this tiny AI business
Nvidia should be a core part of every AI investor's portfolio. But as a multitrillion-dollar business, Nvidia' growth potential is somewhat capped due to sheer size constraints. If you want maximum upside potential -- I'm talking about 1,000% or more -- consider a smaller AI competitor like SoundHound AI (SOUN +1.19%).
Unlike Nvidia, SoundHound isn't a supplier to the AI industry. Instead, it's more of a pure-play AI company. In a nutshell, its business model relies on creating AI services that deal with sound. For instance, fast-food chains might want to replace drive-thru operators with AI agents. Or, more commonly, a business might replace human customer support agents with agents powered by artificial intelligence. Even your car is a potential use case, with AI increasingly being integrated into vehicle sound systems to allow you to chat with your car about maintenance needs, music requests, or hands-free calls and texts.
NVDA PS Ratio data by YCharts
SoundHound has been in business for two decades, and has amassed several hundred patents. But its business isn't just theoretical. Dozens of well-known brands have signed up as customers to pilot the technology, allowing the company to grow sales considerably in recent quarters. Sales growth next quarter is expected to top 166% -- more than double Nvidia's growth rate. Of course, investors must pay for these higher growth rates with a higher price-to-sales ratio. But with a market cap of just $3.5 billion, it's very reasonable to expect SoundHound to grow at these rates for far longer than Nvidia can manage.
NASDAQ: SOUN
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I still have some major concerns with the company's long-term competitiveness. Big tech is investing a lot into AI, including the audio category that SoundHound specializes in. With a research and development budget of just $70 million per year, it's not clear that SoundHound can beat the multibillion-dollar budgets that big tech competitors have over the long term. But if you're looking for maximum growth potential despite a bit of added risk, SoundHound is a great speculative bet.
