The rise of artificial intelligence (AI) presents compelling investment opportunities for those who can identify the right stocks. Experts predict that the productivity gains spurred by AI could add trillions of dollars to the global economy in the long term. While market-leading AI stocks have experienced a dip this year after a period of strong performance, this correction presents a chance for investors focused on long-term trends to position themselves for future profits. Here are two stocks that have fallen from their recent highs and are worth considering for purchase.
SoundHound AI
SoundHound AI (SOUN) is a leading company in voice assistant technology, experiencing robust revenue growth. Despite this, the stock has fallen 49% year to date, following a surge in 2024. Much of the decline occurred after a Securities and Exchange Commission (SEC) filing revealed that Nvidia, a leader in AI chips, had sold its stake in the company. However, a closer examination suggests the sell-off may have been an overreaction, leading to a good buying opportunity.
SoundHound and Nvidia have collaborated to develop AI solutions for vehicles. Their partnership was highlighted at the Consumer Electronics Show (CES) earlier this year, and SoundHound will be presenting at Nvidia’s upcoming GTC 2025, where they plan to showcase demonstrations of their voice assistant technology utilizing generative AI with the Nvidia DRIVE AGX system.
SoundHound nearly doubled its top line in 2024, partially due to the revenue from its acquisition of Amelia. This acquisition helps SoundHound broaden its market beyond vehicles and restaurants, extending to retail, banking, and healthcare sectors. In the fourth quarter, SoundHound also expanded into the energy sector through a deal with one of the largest electric utilities in the U.S. Management indicated during the Q4 earnings call that the company has a strong pipeline of new opportunities and will keep adding new capabilities to its products to increase their value for customers. The company raised its 2025 revenue guidance to $157 million to $177 million, which would represent a 96% increase at the midpoint. With a price-to-sales ratio of 45, the stock may seem expensive, but the company should be able to grow into its valuation. SoundHound is a mid-cap company with considerable potential and a market capitalization of $4 billion, a figure that could be significantly higher in 10 years.
Dell Technologies
Tech firms are investing billions to expand their computing infrastructure to handle AI workloads. Statista estimates that the global AI server market will increase from $31 billion in 2023 to $430 billion by 2033, and Dell Technologies (DELL) is well-positioned to profit from this growth. While Dell primarily generates its income from PC sales and related accessories, 46% of its revenue comes from its infrastructure solutions group, which includes servers. The stock is down 46% from its all-time high in 2024 and off 17% year to date, as concerns over tariffs and potential trade conflict effects introduce near-term uncertainties about the company’s outlook.
Dell claims it possesses a resilient supply chain and has the ability to overcome these obstacles, but its long-term prospects outweigh any short-term cost increases from tariffs. Dell recently finalized a deal with xAI, the creator of the Grok large language model, extending its AI server backlog to $9 billion. The company’s infrastructure solutions business saw a revenue increase of 29% in 2024 to $43.6 billion, offsetting weak PC sales. Dell forecasts revenue and adjusted earnings per share to rise by 8% and 14%, respectively, in 2025, driven by server demand. Dell is also experiencing growth in traditional server and storage solutions. Its PowerStore product has maintained strong demand over the last four consecutive quarters. This demonstrates the company’s offering of differentiated services beyond simply selling servers, increasing value for customers and strengthening its leadership in the market.
Dell anticipates that the addressable market for AI hardware and services will grow at an annualized rate of 33% over the next several years, reaching $295 billion by 2027. Its PC business should see improved demand in the next few years as businesses and consumers upgrade to AI-enabled PCs. The discontinuation of Microsoft’s support for Windows 10 could also drive stronger PC sales. Furthermore, Dell stock is attractively priced, trading at only 10 times 2025 earnings estimates, and has a forward dividend yield of 2.2% at the current share price. This valuation reflects modest expectations for Dell’s PC business, whereas robust demand for Dell’s infrastructure solutions is driving double-digit percentage earnings growth, indicating significant return potential for Dell investors.
