Artificial intelligence (AI) stocks are soaring. Even the private market is progressing like a gangbuster. More than a fifth of all venture capital funding is currently going to AI startups, according to a Crunchbase report.
Want to join? Here are two AI stocks that have created a significant number of new millionaires in recent months.
1. Nvidia: This one stock is the king of AI
No list of AI stocks would be complete without it. Nvidia (NASDAQ:NVDA). Global spending on AI systems and services will reach $150 billion in 2023. It is estimated that he will spend more than $200 billion this year. And that's just the tip of the iceberg. Bloomberg Intelligence believes that generative AI will become his $1.3 trillion industry by 2033.
These AI applications will rely on semiconductors, and the world will need more of them to meet the rapidly increasing demand. This is why Nvidia's market capitalization has ballooned from $200 billion to nearly $2.4 trillion in recent years. The company simply has a meaningful head start over its competitors in supplying this burgeoning industry with the materials it needs to function.
OpenAI's ChatGPT was trained using Nvidia A100 processors in 2022, and its next-generation H100 processors have been in full production for over a year. Fool contributor Harsh Chauhan said, “This lead gives Nvidia a firm grip on its AI chip market, and also explains why competitors' latest products haven't gotten as much attention.” For example, [Advanced Micro Devices] The company expects its AI GPU sales to reach at least $4 billion in 2024. intel is further behind and expects AI chip sales to reach $500 million in the second half of 2024 with the launch of Gaudi 3. ”
While many investors have already made millions of dollars in Nvidia stock, it's important to note that much of the company's expected growth still lies ahead. Although sales have increased dramatically in recent years, Nvidia's market capitalization growth has far outpaced this sales growth. And the company's price-to-sales ratio has skyrocketed, nearly tripling over the past 12 months. Most of the quick money he made may have already been made in Nvidia stock, but this is still one of the best investments for long-term AI bulls.
2. Looking for the next big AI hit? SoundHound AI stock could be it.
Looking for faster growth than is possible for a $2 trillion business? Let's take a closer look Soundhound AI (NASDAQ: SOUN).
Founded in 2005, SoundHound is a voice AI and speech recognition company. Think of the company's product as a voice-enabled version of an automated chatbot. SoundHound allows businesses to provide customers with a “live” representative who can provide customized instructions and feedback. At the moment, the company's software is particularly suited to use cases where typical questions are limited. For example, restaurants, one of SoundHound's largest end markets, can have SoundHound AI agents respond to customer questions such as “Do you accept reservations?” or “What time does it open?” SoundHound's software could be widely adopted by fast-food drive-thrus.
Like most AI companies, SoundHound's revenues are small but growing rapidly. Last quarter, his sales totaled $11.6 million, up 73% from the same period last year. With a market capitalization of $1.75 billion, the stock is expensive compared to current sales. But long-term growth could eventually make the current price look like a bargain. The company has the technology and early market adoption to make that future a reality. Fool contributor Geoffrey Seiler wrote, “If the technology becomes a must-have feature and is widely adopted across devices and industries, the sky is the limit, and today's high valuations will look cheap in the future.” I am.
Even Nvidia is bullish on SoundHound stock. Last quarter, Nvidia invested directly in several AI startups. SoundHound is one of his, and he invested $3.7 million for Nvidia to acquire his 0.6% stake. If you're looking for an AI stock with a high upside potential, SoundHound should be at the top of your watchlist.
Should you invest $1,000 in Nvidia right now?
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Ryan Vanzo has no position in any stocks mentioned. The Motley Fool has a position in and recommends Advanced Micro Devices and his Nvidia. The Motley Fool recommends Intel and recommends options for long January 2025 $45 calls on Intel and his short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
2 Millionaire-Maker AI Stocks was originally published by The Motley Fool
