The rise of artificial intelligence (AI) holds tremendous promise for industry and economic productivity. Advancements in the technology are creating new opportunities to streamline and simplify processes, enhancing customer experience, and promising to drive significant economic growth. According to a report from McKinsey & Company, by 2030, up to 70% of companies around the world are projected to adopt AI in some form, resulting in an additional $13 trillion in economic activity.
For investors willing to jump into the fray now, Microsoft (MSFT 0.89%) and SoundHound AI (SOUN 15.38%) are two of the best stocks to consider. Microsoft is a long-standing leader in technology and has taken an early stance on the AI race. In 2023 alone, the company invested a rumored $10 billion in OpenAI, a platform for conversational AI, which it integrated into its Bing search engine, the Azure cloud platform, and its Teams video collaboration software. Experts believe that AI integration could potentially double Azure’s revenue, making it the industry’s largest cloud platform.
On the other hand, SoundHound’s AI focuses on voice recognition. Major automotive brands such as Mercedes-Benz, Hyundai, and Honda are already using its technology to enable AI-driven voice assistants in their vehicles. The company is also serving the entertainment industry and has a handful of restaurants and hospitality businesses on its client list. Although SoundHound AI has an impressive $335.9 million backlog, it is still far away from profitability and just needs to finance itself for the next 12 months to turn a profit.
When it comes to building an AI-focused portfolio, investors should keep a combination of Microsoft and SoundHound in mind. Microsoft may be a more established and predictable stock, but SoundHound offers a more volatile yet potentially higher reward opportunity. Both have tremendous growth potential linked to AI, and investors that identify them now and invest for the long-term could reap the highest returns.
