Last year, **artificial intelligence (AI)** stocks soared to incredible heights, capturing the attention of savvy investors worldwide. However, as we move into 2025, many of these growth darlings have experienced drastic valuation drops. For those of you eyeing potential **discounted AI investments**, it’s time to get excited! Today, we’ll explore **two essential AI stocks** that could set you up for substantial rewards in the near future.
Every AI Investor Should Own This Stock: **Nvidia**
If you’re serious about enhancing your portfolio with **AI stocks**, you simply cannot overlook **Nvidia** (NVDA -1.51%). In fact, if you already have Nvidia shares, **double down and buy more**. Why? Because in the race towards the AI revolution, Nvidia is the **undisputed leader**.
Nvidia's Dominance in AI Technology
Nvidia isn’t just about flashy marketing; it's the backbone of the AI industry. The company specializes in producing **graphics processing units (GPUs)**—the essential hardware that powers the development and execution of AI services. Despite the premium price tag attached to its products, Nvidia’s chips consistently outperform competitors, cementing its status as **the preferred supplier** in the AI ecosystem. With an impressive **90% market share** in data center GPUs, Nvidia is in a prime position to drive the AI industry's growth.
Since the beginning of 2025, Nvidia's stock has taken a nearly **20% dip**, which might seem alarming. However, keep in mind that **the AI revolution is just getting started**. With sales projected to rise **57% this year** and an additional **24% next year**, Nvidia’s stock could be considered a bargain for investors who are ready to embrace a premium for long-term gains. Additionally, Nvidia's extensive **vendor lock-in** through platforms like **CUDA** enables developers to tailor Nvidia chips, increasing the likelihood that they’ll stick within its ecosystem.
Unlock Maximum Growth Potential with This Smaller AI Player: **SoundHound AI**
While Nvidia is a powerhouse in many investors' portfolios, its sheer size may limit future growth potential. If you're looking for **extraordinary upside**—think **1,000% returns**—then consider a smaller player: **SoundHound AI** (SOUN -4.22%).
The Unique Proposition of SoundHound AI
Unlike Nvidia, SoundHound operates as a **pure-play AI company**, focusing primarily on **sound-based AI services**. Imagine fast-food chains wanting to integrate AI agents into their drive-thru systems, or businesses aiming to replace traditional customer support staff with AI-powered solutions. The applications are vast, even extending to cars utilizing AI to manage maintenance inquiries, music requests, and hands-free communication.
Founded two decades ago, SoundHound has amassed an impressive portfolio of **hundreds of patents**. Its technology isn’t just theoretical—well-known brands are eager customers, propelling impressive sales growth. For instance, analysts forecast that SoundHound's **sales growth** might exceed **166%** in the next quarter, rapidly outpacing Nvidia’s growth rate. While investors may need to endure a higher **price-to-sales ratio**, with a market capitalization of just **$3.5 billion**, SoundHound has ample runway for sustained growth.
Navigating Risks and Challenges
Though SoundHound holds great promise, potential investors should remain cautious. The major tech players are pouring resources into AI, particularly in sectors related to audio—potentially flooding the market with competition. With a modest **research and development budget** of **$70 million per year**, it’s uncertain if SoundHound can hold its ground against the **billion-dollar spending** of industry giants. However, if you’re seeking **maximum growth potential** with an appetite for risk, SoundHound is a compelling speculative opportunity.
In summary, as the AI landscape evolves, keeping **Nvidia and SoundHound AI** in your investment sights could be the key to capitalizing on this **dynamic market**. Whether you’re a veteran investor or new to the AI scene, these stocks could help you **navigate future market swings** and **reap significant rewards**.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
