2025 hasn't been a good year for artificial intelligence (AI) stocks so far. Investors became risk-averse over economic uncertainty created by a tariff-fueled trade war that raised the chances of a global recession. That uncertainty, though, also means there is a chance the scenario might change for the better in the coming months.
The Trump administration has already shown signs of flexibility in its stance on tariffs by implementing a 90-day pause on some of its "reciprocal" tariffs to allow for time for negotiation with the affected countries. Additionally, the administration exempted import duties on select items, including semiconductors, smartphones, displays, and other electronic components. Moreover, both China and the U.S. have indicated their willingness to enter into trade talks that could help resolve the ongoing turmoil. If resolutions do occur relatively quickly, it won't be surprising to see AI stocks regain their mojo in the second half of 2025.
That's why now may be a good time to take a closer look at Taiwan Semiconductor Manufacturing (TSM +5.74%) and SoundHound AI (SOUN +1.34%), two AI stocks that have pulled back somewhat on price this year but could soar in the second half.
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1. Taiwan Semiconductor Manufacturing
Popularly known as TSMC, Taiwan Semiconductor is the world's largest semiconductor foundry. It fabricates chips for fabless chipmakers and major consumer electronics companies. Shares of TSMC are down 12% in 2025 as of this writing, but the foundry giant has started recovering following the release of the company's quarterly results last month.
NYSE: TSM
Key Data Points
TSMC released its first-quarter 2025 results on April 17, reporting a big increase in its top and bottom lines. What's more, the company provided a solid outlook for the current quarter, driven by the terrific demand for its AI chips. Specifically, TSMC is expecting "revenue from AI accelerators to double in 2025." That's not surprising as TSMC manufactures various types of AI chips such as graphics processing units (GPUs), custom AI processors, memory controllers, and central processing units (CPUs) for multiple AI customers.
TSMC's client list includes Nvidia, AMD, Broadcom, Marvell Technology, and even Intel. Even Apple uses the Taiwan-based company's fabrication plants to manufacture chips that power its various devices, while Qualcomm has reportedly decided to use TSMC's advanced chipmaking process for manufacturing smartphone processors.
This puts TSMC in the middle of the AI chip boom, which explains why it is expecting a big jump in revenue from this segment in 2025. Moreover, TSMC is on track to double its advanced chip packaging capacity this year so that it can meet the "robust AI-related demand from our customers throughout 2025."
Not surprisingly, the semiconductor bellwether forecasted stronger revenue growth in the current quarter. It expects Q2 revenue of $28.8 billion at the midpoint of its guidance range, which would be a 38% increase from the year-ago period. TSMC's revenue increased 35% year over year in Q1. What's more, the operating profit margin guidance of 48% points toward a 5.5 percentage point jump from the year-ago quarter.
So, TSMC seems well placed to deliver outstanding earnings growth as well. Consensus estimates project a 31% increase in the company's earnings in 2025, but don't be surprised to see the company doing better than that. After all, analysts raised their earnings growth expectations for TSMC following its latest quarterly results. It is expected to deliver $9.26 per share in earnings this year as compared to $9.07 per share a month ago.
If TSMC hits that target and trades at 24.5 times forward earnings after a year (in line with the tech-laden Nasdaq-100 index's forward earnings multiple), its stock price could jump to $227. That would be a 31% increase from current levels, though more upside cannot be ruled out since it is capable of clocking stronger earnings growth that could lead the market to reward it with a premium valuation.
TSMC stock trades at 22 times earnings right now, which means that investors are getting a good deal on this AI stock that they may not want to miss, as it seems set for a solid performance in the second half of the year.
2. SoundHound AI
SoundHound AI investors have endured a terrible year so far, as shares of the AI voice solutions provider have lost nearly 55% of their value as of this writing. However, the company's growth and outlook clearly indicate that it could step on the gas in the second half of the year on the back of a potential improvement in investor sentiment when trade talks get underway.
NASDAQ: SOUN
Key Data Points
Importantly, investors can buy SoundHound stock at 36 times sales right now. While that is expensive (U.S. tech sector stocks have an average sales multiple of 7), SoundHound is much cheaper than its price-to-sales ratio of 90 at the end of 2024. The good part is that the company's growth is incredible enough to help it justify an expensive valuation.
Though the company is yet to release its first-quarter 2025 results, analysts are forecasting a 162% year-over-year increase in SoundHound AI's revenue to just over $30 million. It won't be surprising to see the company indeed hitting that mark as it expects its 2025 revenue to land at $167 million at the midpoint of its guidance range, which would be nearly double its top line last year.
However, there is a possibility of SoundHound exceeding both Wall Street and its own expectations as the year progresses, given its massive cumulative subscriptions and bookings backlog worth $1.2 billion. This metric grew by 75% year over year in the fourth quarter of 2024, driven by the company's expanding customer base and acquisitions.
Looking ahead, SoundHound AI stock seems in a position to sustain its outstanding growth for a long time to come, given that the size of the conversational AI market that it serves could grow nearly fourfold by 2030, generating almost $50 billion in annual revenue. Throw in the fact that SoundHound is looking to push the envelope in the voice AI market by launching voice-enabled AI agents, and it may be able to corner a nice share of the end-market opportunity on offer.
So, savvy investors looking to add a growth stock to their portfolios can consider adding SoundHound to their portfolios following its sharp drop this year, as it can not only soar in the second half of 2025 by delivering better-than-expected results, but it seems primed for solid gains in the long run as well.
