2 Artificial Intelligence (AI) Stocks That Could Double in 2024 – The Motley Fool

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If you're looking for big gains from AI, these two stocks could deliver.
At this point, many of the biggest winners in artificial intelligence have been the world’s most valuable companies.
However, if you’re looking for stocks that can double this year, mega-cap names like Nvidia and Microsoft, which have already seen big gains from AI, aren’t the best candidates. Adding more than $2 trillion or even $3 trillion in market cap in one year would be extraordinarily difficult for even the best companies.
Instead, investors are better off looking for smaller AI companies with large growth potential. Here are two of them.
For small-cap AI stocks, SoundHound AI (SOUN 5.00%) is a great place to start.
The company was an early adopter of artificial intelligence technologies, and it specializes in voice recognition and music and audio identification. SoundHound competes with Shazam, the popular song identification app, but its main business is in licensing its technology for voice recognition systems in automobiles, restaurants, smart devices, and other industries and products.
The company calls itself a leader in AI, and it has been in the spotlight ever since Nvidia unveiled its stake in the company earlier this year. Many investors consider that position an implicit endorsement of SoundHound’s technology.
SoundHound is still small, but it’s growing quickly. The company reported $17.1 million of revenue in its fourth quarter, up 80% year over year. It’s also unprofitable but moving quickly toward the break-even mark. It fourth quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss narrowed from $18.8 million a year ago to $3.7 million.
The company continues to sign up new customers, such as Stellantis, and it’s testing a pilot with Peugeot, Opel, and Vauxhall. In the restaurant industry, it’s added Jersey Mike’s, Krispy Kreme, and White Castle, among others.
SoundHound stock had already doubled earlier this year, but it has since fallen over 50% from its high. However, even from its current level, SoundHound looks like a good candidate to double again as management expects revenue to surge another 50% this year, while adjusted EBITDA turns positive in 2025.
Roku (ROKU 4.10%) might not be thought of as an artificial intelligence stock, but the leading streaming distribution platform is embracing the new technology. Its position as a hub of digital advertising, entertainment recommendations, and digital devices naturally makes it a good candidate for AI.
Earlier this year, Roku announced a new set of AI-powered features, called Smart Picture, for its Roku-branded TVs, which will adjust the picture according to backlighting, color, and other content on the screen.
Roku is also using AI and machine learning to improve its ad targeting so it serves more relevant ads to viewers and maximizes reach. Advertisers can better control the number of ads they show audiences in their target demographics, giving them greater control over their spending and budget. Similar to how streaming services like Netflix use AI for recommendations, Roku also uses it to help users find programs to watch, and the interface that viewers engage with is mostly driven by machine learning.
Like SoundHound, Roku looks like a good candidate to double this year. The stock plunged after its fourth-quarter earnings report as guidance was a bit weaker than expected, and the company cited challenges in its core media and entertainment vertical as a number of its streaming partners are still struggling to turn a profit.
However, digital advertising demand is on the rebound after a lull in 2022 and 2023, and Roku’s audience continues to grow briskly. With the added benefit of AI technologies, the company’s margins should also ramp up, driving the stock out of its current doldrums.
Roku stock is trading close to half of where it was in Nov. 2023. Returning to that prior level by the end of this year is certainly within reach for the streaming stock.
Jeremy Bowman has positions in 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: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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