These 2 artificial intelligence (AI) stocks are a buy after the recent selloff

Artificial intelligence (AI) stocks have been hot for a while, but lately they’ve met some skeptical market makers. As a result, some top AI experts are on sale right now, and I expect them to come back strong in the long run.

Read on to see why the semiconductor company Intel (INTC 3.75%) and voice recognition expert SoundHound AI (SOUND 1.07%) show that they are not buying right now.

Some key roles of Intel in AI

You’d think Intel would be a market darling right now, but it’s not.

• Its Xeon processors play a vital role in managing data streams in AI accelerator chips, so there are plenty of Xeons in many AI training supercomputers.
• Intel also offers its own AI acceleration chips with advantageous performance comparable to the best from Nvidia (NVDA 4.89%).
• At the same time, the company makes AI chips for other companies, including a long-time computing partner Microsoft (MSFT 1.61%).

So Intel has its finger on the pulse of AI from several different angles. However, the stock has languished instead of rising in the AI ​​boom. While Nvidia stock has quintupled over the past three years and S&P 500 (^GSPC 1.13%) market index gained 26%, Intel investors were stuck with a decline of 60%.

INTC Total Return Level data by YCharts.

The bearish pressure on Intel stock is easing. The company missed Wall Street’s consensus targets in its recent Q2 report, but announced ambitious cost cutting and timely progress on its next high-end manufacturing node, codenamed Intel 18A.

Shares of Intel were already affordable before this report, but fell another 26% the next day. The company is going through an unprofitable period of expensive investment in production equipment, setting it up for fantastic long-term business results. With $120 billion in equity (also known as book value), the stock is trading at a price-to-book ratio of 0.69.

This is an all-time low and a valuation usually reserved for companies on the brink of bankruptcy. Meanwhile, Intel has plenty of growth catalysts in play, often tied to the AI ​​revolution. Because of this imbalance between solid business prospects and declining market value, I see a great buying opportunity in Intel’s current price decline.

SoundHound AI’s transition to the mass market

SoundHound AI is an early-stage development story, not a turnaround effort. The company is just starting out with a business plan to make money after running a popular but not very profitable song identification service for nearly two decades.

Shares surged earlier this year as investors heard Nvidia bought $3.7 million in SoundHound AI stock, but the high price didn’t last. Shares have traded sideways for three months after a steep price decline in March and April.

So the stock looks sleepy, but there is nothing dull about the underlying business story. Last week’s second-quarter report beat analysts’ average expectations across the board. After buying conversational artificial intelligence specialist Amelia, SoundHound AI raised its full-year revenue estimate from about $71 million to at least $80 million, followed by a rise to more than $150 million in 2025.

The company is beginning to convert its enormous backlog into cash sales. If that’s not exciting enough, they keep adding household names to their client list. Recent examples include the sports barbecue chain Beef O’Brady’s and the sandwich seller Jersey Mike’s.

Automotive partners range from mass market brands Honda and Hyundai to exclusive top names such as Stellar (STLA -0.10%) Alfa Romeo brand. SoundHound AI’s advanced voice commands are rolling out to many Stellantis brands right now, starting with overseas markets like Europe and Japan. You will see the tide reach American shores soon enough.

In short, I expect big things from management’s promising business plans. I’ll admit the stock looks a little pricey right now, but it’s one of those high-octane growth stories that could take off in a hurry. I’m talking about both the business results and the stock chart.

That’s why I recommend picking up some SoundHound AI shares at this brief lull in the growth story. This little company is going places and I don’t think it will stay small much longer.