2 AI Stocks to Buy in December and Hold for 20 Years – The Motley Fool

It seems like every decade brings a new wave of growth stocks that benefit from the latest trends in the economy. Over the past two decades, investors who jumped on the growth of e-commerce early have generated enormous wealth (Amazon), streaming video (Netflix), electric vehicles (tesla). Artificial intelligence (AI) brings the next wealth creation opportunity to the stock market.

According to Statista, the AI ​​market is expected to grow from $184 billion in 2024 to $826 billion by 2030. Here are two stocks that many investors may wish they had bought within the next 20 years.

1. Soundhound AI

AI-powered voice assistants are starting to be widely adopted for things like customer service and smart ordering, but the next decade is likely to create many new use cases in electric vehicles and other markets. Soundhound AI (Seoun 12.60%) is emerging as a leader in this market. Although we are a relatively small company, we are growing rapidly.

SoundHound's final revenue was $67 million, laying the foundation for explosive revenue in the coming years as more companies adopt its technology. The company's third-quarter sales increased 89% year over year, in part due to its recent acquisition of Amelia, but it had already reported strong growth before that, with sales increasing in the second quarter. This was an increase of 54% compared to the same period last year.

SoundHound is in the process of expanding its customer base beyond its traditional focus on automotive and restaurants to other markets such as retail, healthcare and banking. This significantly expands the addressable market and helps the company scale up to improve profit margins. Last year, SoundHound's top five customers accounted for more than 90% of its business, but now they account for less than a third.

Another encouraging sign about SoundHound's growth prospects is its list of partnerships with other major technology companies. Nvidiasamsung, oracleand ServiceNow One of the companies working with AI voice readers.

The main negative against SoundHound AI is the lack of profitability, which is not uncommon for small technology companies. Management expects the business to have positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2025, which is driving the stock price higher. Investors have an opportunity to get in on the ground floor before Wall Street takes notice of this new growth story and bids the stock higher.

2. Advanced microdevices

advanced micro device (AMD -1.96%) The stock price has tripled over the past five years as the company gained market share against intel. AMD is a leading supplier of central processing units (CPUs), graphics processing units (GPUs), systems-on-chips (SoCs), and other products to various markets. However, rising demand for the company's data center GPUs continues to demonstrate why this stock can deliver outstanding returns.

Data center revenue in the third quarter increased 122% year-over-year to $3.5 billion, which helped boost AMD's total revenue by 18%. Management attributed the increase in data center revenue to strong demand for the Instinct family of GPUs. As more advanced AI models emerge and more use cases for this technology emerge, demand for AMD's chips could increase significantly.

Last year, management predicted the data center AI chip market would grow from $45 billion in 2023 to more than $400 billion in 2027. However, after the company's data center business beat its 2024 revenue forecast, management recently updated its long-term forecast, and the market for AI accelerators is now expected to reach $500 billion by 2028. Masu.

Investor writing is posted on the wall. With the introduction of AI, new leaders are emerging in the semiconductor industry. AMD generated more data center revenue than Intel last quarter. Intel dominated the CPU market for decades, but the AI ​​boom is now favoring companies with expertise in GPU development, which is essential for training AI models.

Nvidia is another GPU supplier that could be a good choice for investors, but AMD still has a lot of opportunity to capture Intel's share in CPUs, which may not be fully reflected in the stock's valuation. It may not be. AMD stock is currently down 33% from its recent highs, so it's a great time to start investing before further growth drives the stock higher.