SoundHound AI, Serve Robotics, and Evolv Technologies are potential multibaggers.
Nvidia has turned a $10,000 investment into $2.5 million over the past 10 years. This significant gain is primarily driven by the rapid expansion of the artificial intelligence (AI) market, with many companies purchasing the company’s data center graphics processing units (GPUs) to handle complex machine learning and AI applications. has been strengthened.
Nvidia still has room to run, but the $2.9 trillion company may have a hard time replicating billionaire profits. Investors looking for higher returns should focus on smaller AI companies with greater upside potential.
SoundHound AI (SOUN -2.65%), Serve Robotics (SERV 11.57%), and Evolv Technologies (EVLV 1.21%) are three small-cap AI stocks that have the opportunity to generate millionaire-making profits over the next decade.
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Voice recognition play: SoundHound AI
SoundHound AI develops audio and speech recognition tools. Its namesake app identifies songs by listening to short clips or hummed bars, and its Houndify developer platform is a suite of customized speech recognition tools that don’t feed data to tech giants like Alphabet Inc.’s Google. used for creation.
Automakers like Hyundai, smart TV makers like Vizio, and fast food chains like Church’s Chicken are already using Houndify to create voice recognition tools. Nvidia, which has a small stake in SoundHound, is also integrating Houndify’s services into its Drive platform for connected cars.
SoundHound went public in 2022 by merging with a special acquisition purpose company (SPAC) and later expanded by acquiring restaurant tech companies SYNQ3 and Allset. It acquired enterprise AI software company Amelia and partnered with AI chatbot maker Perplexity to power its large-scale language models (LLM).
SoundHound’s revenue grew 47% in both 2022 and 2023. Analysts expect the company’s revenue to grow at a compound annual growth rate (CAGR) of 82% from 2023 to 2025 as it continues to acquire new customers and grow its ecosystem. The company remains unprofitable and the stock is not cheap at 10x next year’s sales, but it could evolve into an even bigger company over the next few years as the AI-powered voice recognition market expands.
How automatic delivery works: Saab Robotics
Serve Robotics makes autonomous sidewalk delivery robots powered by AI. The company was originally part of Postmates, which was acquired by Uber in 2020. Uber subsequently spun off as an independent company and went public through a reverse merger in April of this year. Nvidia also acquired a 10% stake in the company earlier this year.
Serve’s main customer remains Uber Eats, with only 44 of its 100 active robots making daily deliveries in the Los Angeles area in the first half of 2024. But in 2025, the company plans to ramp up production and deploy up to 2,000 robots across the United States. In the case of Uber.
Serve’s long-term business model is still untested, it generates little revenue and continues to lose money. The company’s stock price also appears to be quite expensive, with next year’s sales 23 times.
But analysts expect the company’s revenue to rise from $1.6 million this year to $60 million in 2025. And if the company succeeds in scaling up its operations, attracting more customers and gradually replacing delivery drivers, there could still be more room for business.
AI-powered security strategy: Evolv Technologies
Evolv aims to replace traditional metal detectors with an AI-powered screening system that can scan people up to 10 times faster. The system can even screen two people at once, without having to empty pockets, remove bags, or even slow down.
Evolv went public in 2021 through a reverse merger and attracted a lot of attention as it was initially backed by Bill Gates. We currently serve more than 800 major customers, including schools, hospitals, and major sports teams, and test more than 1 million people every day. We have more than 4,000 special forces deployed around the world and detect more than 500 firearms every day. It uses its own cloud-based service to store and analyze all that data.
Evolv’s system is much more expensive than metal detectors, but could become a necessary security tool as the threat of mass shootings increases. Evolv is not yet profitable, but its revenue soared 395% in 2021, 133% in 2022, and 46% in 2023. Analysts expect the company’s revenue to grow at a CAGR of 28% from 2023 to 2026. The company’s stock is still reasonably valued at five times next year’s sales, and could rise even higher as it replaces aging metal detectors around the world.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Leo Sun has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Nvidia, Serve Robotics, and Uber Technologies. The Motley Fool has a disclosure policy.
