My Top 2 AI Stocks for 2025

On December 26, 2024By Littum

The advent of artificial intelligence (AI) in 2024 has reshaped our world in ways previously confined to science fiction. Virtual assistants now handle complex customer service queries with human-like understanding, while AI-powered chips process vast amounts of data at unprecedented speeds. These technological breakthroughs have captured Wall Street’s attention and drive S&P 500‘s (SNPINDEX: ^GSPC) remarkable bull run since October 2022.

The economic impact of this AI revolution promises to be transformative. PwC projects that AI will add $15.7 trillion to the global economy by 2030. This is no longer just about chatbots and automation. AI is fundamentally transforming how businesses operate, from restaurants using voice AI to handle drive-thru orders to data centers requiring increasingly sophisticated chips to power their AI operations.

A holographic projection of the letters AI on a circuit board. — Image source: Getty Images.

Many investors have already benefited from the meteoric rise of AI through industry giants such as Nvidia (NASDAQ: NVDA). However, the next wave of AI growth may come from companies that are just now starting to flex their technological muscles. As we approach 2025, two companies stand out for their unique positions in AI value chainthat offer investors new opportunities to capitalize on this technological revolution.

SoundHound AI (NASDAQ: SOUN) has quietly built an AI empire that is revolutionizing how businesses interact with customers. In November 2024, the company reported quarterly revenue of $25.1 million, representing an 89% year-over-year increase as more businesses adopt voice AI solutions.

What makes SoundHound AI particularly exciting is its rapid transformation from a car-focused company to a diversified AI powerhouse. The company now serves seven of the top 20 global quick-service restaurant chains, with its AI handling everything from drive-thru orders to phone reservations. Its expansion into financial services, healthcare and insurance demonstrates the universal appeal of its technology platform.

Major car manufacturers are not left behind. Stellantis has integrated SoundHound AI’s technology across its luxury brands in Europe, while partnerships with next-generation automakers in the Middle East and India are showing global demand.

With the AI voice generator market expected to grow nearly 30% annually through 2030, SoundHound AI’s first-mover advantage and proven technology make it a compelling play for investors seeking exposure to the future of human-machine interaction .

Advanced micro-devices (AMD) (NASDAQ: AMD) has emerged as the dark horse in the AI chip race, offering performance that rivals Nvidia to some extent at more attractive price points. The numbers tell the story: AMD’s data center revenue rose to $3.5 billion in its most recent quarter, marking a staggering 122% year-over-year jump.

The company’s AI graphics processing units (GPUs) business has exploded from virtually nothing a year ago to over $1.5 billion in the most recent quarter. This growth stems in part from AMD’s strategic partnership with Taiwan Semiconductor Manufacturing and its innovative chiplet manufacturing approach – a combination that allows for rapid product development and competitive pricing.

The potential market opportunity is astounding. Industry analysts expect the AI accelerator market to reach $500 billion by 2028. While Nvidia currently dominates this space, customers and developers are actively seeking alternatives to prevent over-reliance on a single vendor. AMD’s competitive pricing, proven technology and established reputation make it perfectly positioned to capture a significant share of this growing market.

The convergence of voice AI technology and semiconductor innovation represents two distinct paths to take advantage of AI revolution. SoundHound AI offers pure-play exposure to the fast-growing voice AI market, where the technology has already proven transformative across multiple industries. Meanwhile, AMD is giving investors access to the critical infrastructure powering the AI boom with its competitive pricing strategy and technology capabilities that challenge the status quo in AI chipmaking.

As we move into 2025, these companies represent more than just potential growth stories – they are actively reshaping how businesses operate and interact with customers. For investors looking to capitalize on the next wave of AI innovation, SoundHound AI and AMD offer compelling opportunities to participate in this technological revolution while it is still in its early stages. Their unique market positions, proven technology and massive addressable markets create a powerful combination that can deliver significant returns as the AI revolution continues to unfold.

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Nvidia: if you invested $1,000 when we doubled in 2009, you would have $362,166!*
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Right now we are issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns on December 23, 2024

George Budwell holds positions at Nvidia, SoundHound AI, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Stellantis. The Motley Fool has one disclosure policy.

My Top 2 AI Stocks for 2025 was originally published by The Motley Fool