Many of the biggest winners in artificial intelligence right now are among the world's most valuable companies.
However, if you're looking for stocks that have the potential to double this year, these mega-cap names are great choices. Nvidia and microsoft, which has already benefited greatly from AI, is not the best candidate. It would be extremely difficult for even a good company to increase its market capitalization by more than $2 trillion, or even $3 trillion, in one year.
Instead, investors would be better off looking for smaller AI companies with significant growth potential. Here I will introduce two of them.
1. Soundhound AI
For small-cap AI stocks, Soundhound AI (NASDAQ: SOUN) It's a great place to start.
The company is an early adopter of artificial intelligence technology and specializes in voice recognition, music and audio identification. SoundHound competes with popular song identification app Shazam, but its main business is licensing technology for voice recognition systems in cars, restaurants, smart devices, and other industries and products.
The company bills itself as a leader in AI and has been in the spotlight since Nvidia announced an investment in the company earlier this year. Many investors believe that position implicitly supports SoundHound's technology.
SoundHound is still small but growing rapidly. The company reported his $17.1 million revenue in the fourth quarter, up 80% year over year. And although we are not making a profit, we are rapidly moving towards break-even. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss narrowed to $3.7 million in the fourth quarter from $18.8 million a year earlier.
The company continues to sign up new customers, including: Stellantis, Peugeot, Opel, Vauxhall and Pilot. In the restaurant industry, Jersey Mike's has been added. Crispy creamWhite Castle, etc.
Soundhound stock had already doubled earlier this year, but has since fallen more than 50% from its peak. But even on current levels, SoundHound looks like a strong candidate to double again, as management expects revenue to grow another 50% this year and return to positive adjusted EBITDA in 2025. It looks like.
2. Roku
Roku (NASDAQ:ROKU) It may not be considered an artificial intelligence stock, but the leading streaming platform is embracing new technology. Given its status as a hub for digital advertising, entertainment recommendations, and digital devices, it is a natural candidate for AI.
Earlier this year, Roku announced a new set of AI-powered features for Roku-branded TVs called Smart Picture that adjust images depending on backlight, color, and other content on the screen. .
Roku also uses AI and machine learning to improve ad targeting, delivering more relevant ads to your audience and maximizing your reach. Advertisers have better control over the number of ads shown to their target audience, giving them more control over their spending and budget.Similar to how streaming services work Netflix Roku uses AI for recommendations, Roku also uses AI to find shows for you to watch, and the interface that viewers interact with is primarily driven by machine learning.
Like SoundHound, Roku also looks like a strong candidate to double down this year. Shares plummeted after the fourth-quarter earnings report as guidance was slightly weaker than expected, and the company continued to struggle with challenges in its core media and entertainment sector as many of its streaming partners still struggle to turn a profit. I mentioned it.
However, demand for digital advertising is rebounding after a lull in 2022 and 2023, and Roku's viewership continues to grow rapidly. The added benefits of AI technology should also boost the company's profits and lift the stock out of its current slump.
Roku stock is trading at nearly half of what it was in November 2023. A return to previous levels by the end of this year is certainly within reach for streaming stocks.
Should you invest $1,000 in SoundHound AI right now?
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Jeremy Bowman has roles at Netflix and Roku. The Motley Fool has positions in and recommends Microsoft, Netflix, Nvidia, and Roku. The Motley Fool recommends Stellantis and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks That Could Double in 2024 was originally published by The Motley Fool.