AI Market Boom: Stocks to Consider Amid Growing Demand

Investors should look closely at the report detailing the surge in demand for generative AI applications, highlighting Soundhound AI and Nvidia as key players whose stocks could benefit from the expansive growth expected in the AI market.

Date: 01-10-2024

AI Rating: 7

The report outlines the robust demand for generative AI, particularly applications that create responses, images, and videos from simple text inputs. Two notable companies in this sector, Soundhound AI and Nvidia, are positioned to benefit significantly from this market expansion.

Soundhound AI, recognized as a leader in conversational voice assistants, has experienced a remarkable revenue growth. The company reported a year-over-year revenue increase of 54%, reaching $13.5 million in the second quarter. However, it needs to address its net income situation, as it reported an adjusted net loss of $14.8 million last quarter. Soundhound's heavy investment in marketing, which accounted for 42% of its revenue, is gradually expected to become a source of profitability as brand recognition increases.

Nvidia, a key player in the AI chip market, has also shown impressive revenue growth with a staggering 122% increase year-over-year. The company’s initiatives in AI chips and software services position it favorably against competitors despite emerging threats in custom AI chip-making. Nvidia’s forward price-to-earnings ratio at 30 appears reasonable given its market leadership.

In summary, both companies shine in the AI sector, but investors should weigh the promising revenue growth against the risks associated with profitability for Soundhound AI and competition for Nvidia.

Stocks: NASDAQ:SOUN NASDAQ:NVDA