It has been another good year for the stock market, with the S&P 500 index entering the third year of its bull run a couple of months ago. Despite a shaky start to the year, major indexes quickly found their footing and are up impressively in 2025 as of this writing.
The Nasdaq Composite index is up almost 20% this year, indicating that technology stocks have enjoyed another decent year. Meanwhile, the S&P 500 index is also sitting on healthy gains of 16%. The good news for investors is that the S&P 500 index is expected to hit a level of 7,500 after a year, according to HSBC, a potential upside of 10% from current levels.
Deutsche Bank has a more ambitious S&P 500 forecast of 8,000 by the end of 2026. HSBC points out that artificial intelligence (AI) will continue to play an essential role in driving the stock market higher in 2026. That's why it would be a good idea to take a closer look at AI stocks that are playing a key role in this industry and can soar higher in the new year.
Assuming you have $1,000 in investable cash at your disposal after meeting your expenses, clearing high-interest loans, and saving for a rainy day, it may be a wise move to put that money (either individually or combined) into the two AI stocks discussed in this article.
Let's see why these two names could be big winners in 2026 and beyond.
Image source: Nvidia
Recent developments indicate that this AI giant is on track for a blockbuster year
AI chip leader Nvidia (NVDA 1.53%) has delivered respectable returns of 31% in 2025. However, 2026 could turn out to be a much better year for the chipmaker, as it is likely to witness stronger demand for its chips.
NASDAQ: NVDA
Key Data Points
Nvidia already has a massive data center order backlog of around $290 billion for 2026. That's well above the $167 billion data center revenue that Nvidia generated in the past year. What's more, President Donald Trump's announcement that Nvidia will now be able to sell its advanced H200 chips into the Chinese market has the potential to add $30 billion to Nvidia's top line next year.
Export restrictions imposed on the sale of Nvidia's chips to Chinese customers weighed on the company's business earlier this year. However, the demand for its data center graphics processing units (GPUs) in that market remains robust. Reuters reports that Chinese tech giants ByteDance, Tencent, and Alibaba are looking to place large orders for Nvidia's H200 GPU, which is six times more powerful than the H20 chip it was selling into that market earlier this year.
Therefore, it won't be surprising to see Nvidia's earnings grow at a faster pace than the 59% jump to $7.45 per share that analysts are estimating for next year. The potential access to the Chinese market could boost Nvidia's revenue by an additional 10% next year (based on the $316 billion consensus estimate), and that could give its earnings growth a nice shot in the arm.
All this explains why analysts expect a 42% increase in Nvidia's stock price in the coming year based on its median 12-month price target of $250. It could ultimately outperform expectations, which is why it would be a good idea to put your investible cash into the chipmaker.
This beaten-down stock could make a solid comeback in 2026
SoundHound AI (SOUN 4.11%) has had a forgettable 2025. Shares of the AI voice solutions company have lost 46% of their value this year after a phenomenal 2024. However, the 12-month median price target of $16 suggests that the stock could rise 48% in the next year.
NASDAQ: SOUN
Key Data Points
What's worth noting is that SoundHound's financial performance has been solid this year. The midpoint of the company's 2025 revenue guidance stands at $172.5 million, which is just over double its 2024 revenue. SoundHound's impressive growth is a result of its expanding customer base, which is seeking to integrate voice AI solutions into its operations to capitalize on the productivity and efficiency gains offered by this technology.
From smart devices to restaurants to vehicles to financial services, SoundHound is gaining traction in multiple areas. Additionally, its agentic voice AI solution is gaining traction among customers serving various industries, as management remarked on the November earnings call. SoundHound, therefore, is making solid progress in a market that's expected to clock annual revenue of $41 billion in 2030, growing at an annual rate of 24%.
The fact that SoundHound's growth is outpacing the broader market is an indication that it is winning a bigger share of this space. As a result, its top-line growth could be much better than the 38% increase to $233 million that consensus estimates are predicting for 2026.
The only problem is that SoundHound is trading at a costly 32 times sales. However, its growth rate is solid enough to justify that valuation. More importantly, SoundHound is capable of maintaining a high growth rate thanks to a huge contractual backlog worth $1.2 billion at the end of last year. As such, there is a strong possibility that SoundHound stock will regain its momentum in 2026, which is why it seems like a good idea to buy it with your investible cash while it is beaten down.
