Title: Two AI Stocks to Secure for the Next Two Decades
Every decade brings a new wave of growth opportunities, and the last two decades have seen massive wealth creation for investors who bought into the right trends early. E-commerce giants like Amazon, streaming behemoths such as Netflix, and electric vehicle pioneers like Tesla have all made fortunes for early investors. The next decade seems set to follow in their footsteps – artificial intelligence (AI) has the potential to create enormous wealth in the stock market.
The AI market is projected to grow from $184 billion in 2024 to a staggering $826 billion by 2030, according to data from Statista. Two companies that could be set for meteoric rises over the next two decades are SoundHound AI and Advanced Micro Devices.
1. SoundHound AI
AI-powered voice assistants are beginning to gain traction in various applications, such as customer service and smart ordering, but their potential extends far beyond these sectors. One company leading the charge is SoundHound AI. Despite being a relatively small player, this innovative company is experiencing impressive growth.
SoundHound's trailing revenue stands at $67 million, providing a solid foundation for future growth as more businesses adopt its technology. Its third-quarter revenue increased a remarkable 89% year over year, thanks, in part, to the recent acquisition of Amelia. However, impressive growth was already baked into the company's figures, with revenue up 54% year over year in Q2.
SoundHound is expanding its customer base beyond its traditional focus on automotive and restaurants to other sectors like retail, healthcare, and banking. This strategic move will significantly expand its addressable market and help the company improve its margins. Interestingly, SoundHound's top five customers accounted for over 90% of its business just last year, but now they represent less than a third.
Another encouraging sign is SoundHound's growing list of prominent partnerships with tech giants like Nvidia, Samsung, Oracle, and ServiceNow. Such collaborations will undoubtedly enhance its reputation and increase its potential for wealth-building opportunities.
The major concern surrounding SoundHound AI is its lack of profitability, which is, unfortunately, a shared characteristic of many small tech companies. However, SoundHound's management has penciled in positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2025. This development is likely to be a major catalyst for its share price.
2. Advanced Micro Devices
Advanced Micro Devices (AMD) has seen its share price triple over the past five years as it gained ground against Intel. AMD is a crucial supplier of central processing units (CPUs), graphics processing units (GPUs), systems on a chip (SoC), and other products across various markets. However, its data center GPUs are what have driven much of its recent success.
Data center revenue surged an impressive 122% year over year in Q3, driving AMD's overall revenue up 18%. Management attributed the growth to robust demand for its Instinct family of GPUs. As advanced AI models proliferate and new use cases for this technology emerge, it's reasonable to expect increasing demand for AMD's chips.
Last year, management estimated the data center AI chip market to grow from $45 billion in 2023 to more than $400 billion by 2027. However, AMDR recently revised its long-term forecast, anticipating the market for AI accelerators to reach an impressive $500 billion by 2028.
The AI boom now favors companies with expertise in developing GPUs, which are essential for training AI models. Although Nvidia is another GPU supplier, AMD has plenty of ground to gain on Intel in the CPU market. With AMD stock currently offering a 33% discount from its recent high, it could be the perfect time to invest in this promising company before its growth potential sends its share price soaring.
- In the realm of finance and investing, SoundHound AI's potential for growth in the AI market is immense. With its impressive revenue growth and strategic partnerships, the company could generate substantial returns for early investors.
- Advanced Micro Devices (AMD) has seen significant growth in its share price due to its success in the CPU and GPU markets. As AI continues to grow, AMD's expertise in these areas position it well to capitalize on the $500 billion AI chip market forecast, making it an appealing investment opportunity.
