The AI Revolution: Can These Stocks Keep Soaring?
The US stock market has experienced an unprecedented surge since artificial intelligence (AI) emerged as a game-changer in early 2023. The S&P 500 has skyrocketed over 50% in just two years, but some AI stocks have left those gains in the dust. Social media giant Meta Platforms has seen its stock price soar over 400%, while SoundHound AI has topped that with nearly 700% returns. Meanwhile, software company Palantir Technologies has taken the cake, galloping over 900% in just 24 months.
The Rise of Conversational AI
SoundHound AI specializes in audio and conversation-based AI technology, which is fundamental to how AI can impact daily life. This technology involves not only understanding and translating audio prompts into machine data but also generating responses. SoundHound AI started in the automotive industry, powering voice commands in vehicles, and has since expanded to the restaurant industry, enabling conversational AI for drive-thrus and ordering. The potential applications are vast, including call centers, retail, and customer service across many industries.
A Mixed Bag of Fundamentals
While SoundHound AI’s revenue grew 89% year over year in the third quarter, its enterprise value of $5.1 billion is steep compared to 2025 revenue estimates of $164 million. This makes the stock look expensive today, and prospective shareholders may want to wait for a pullback before buying. On the other hand, Palantir Technologies has a highly profitable business, converting 37% of its revenue into free cash flow, with a balance sheet boasting $4.5 billion and zero debt. However, its shares have gotten ahead of the business, trading at a PEG ratio of 5.
A Giant in the Making
Meta Platforms, the largest company on this list, has the financials to back up its massive market capitalization. With over $156 billion in annual revenue and $50 billion in cash flow, Meta is deeply involved in AI technology, including data center investments and an open-source AI model. Its primary business is digital advertising, and AI tools have helped increase pricing power and drive growth in the core business. With a PEG ratio of only 1.3, Meta’s valuation could expand further before becoming a concern.
What’s Next for These AI Stocks?
While these AI stocks have seen meteoric growth, their futures are uncertain. SoundHound AI needs to justify its high valuation, Palantir Technologies needs to cool off its valuation, and Meta Platforms needs to continue driving growth in its core business. One thing is certain: AI software will impact almost every industry in the future, and these companies are well-positioned to take advantage of that trend.
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