2 AI Stocks That Could Deliver Explosive Earnings

Artificial intelligence (AI) is poised to revolutionize the global economy. By 2030, AI could add $15.7 trillion to global GDP, a 26 percent increase, according to a report by PwC, a leading global consulting firm. This projected growth is expected to result from significant increases in productivity and increased consumer demand.

A study by the World Economic Forum, an international public-private cooperation organization, found that 70 percent of companies are already integrating AI into their operations. Their research suggests that North America and China are likely to benefit the most from this AI-driven economic expansion.

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As AI reshapes industries and the global economy, investors are actively seeking opportunities within this megatrend. While the AI ​​landscape offers many investment options, two companies are currently showing particular promise. Let’s dive into the underlying investment thesis for these two high-potential AI stocks.

The revolutionary approach to recursion

Recurring pharmaceuticals (RXRX 0.83%) is pioneering a unique approach to drug discovery by leveraging artificial intelligence and machine learning. The company’s Recursion OS platform uses sophisticated algorithms to analyze vast sets of biological and chemical data, discovering potential drug candidates at unprecedented scale and speed. Wall Street analysts see significant upside, with the 12-month consensus price target implying potential gains of nearly 65.9% from current levels.

Recursion recently announced plans to merge with Exscientia, another leading AI drug discovery company. This combination aims to create a strong hub in AI-based pharmaceutical research by bringing together complementary technologies and pipelines.

The rationale for the merger highlights several key advantages. The combined entity will have approximately 10 clinical readouts expected in the next 18 months, with most programs targeting billion-dollar market opportunities if successful.

Together, Recursion and Exscientia have collaborations with large pharmaceutical companies such as Roche, Bayerand Sanofi. These partnerships could generate over $20 billion in potential milestone payments.

Integrating Exscientia’s precision chemistry tools with the Recursion biology discovery platform could accelerate drug discovery timelines and improve candidate quality. Recursion’s independent business is also making progress.

The company recently announced that Roche/Genentech has optioned its first neuroscientific phenomap, triggering a $30 million payment. This development validates Recursions’ unique mapping approach to drug discovery.

SoundHound Voice AI Dominance

SoundHound AI (SOUND) is a leader in conversational intelligence, developing advanced voice AI solutions for companies across all industries. The company’s technology powers voice assistants and customer service interfaces for major brands in the automotive industry, restaurants and more. Wall Street is exceptionally bullish on SoundHound’s near-term outlook, with the consensus price target suggesting a robust upside potential of 66% from current levels.

What motivates this optimistic outlook? SoundHound’s Q2 2024 results demonstrated strong momentum on key metrics. The company reported an impressive year-over-year revenue increase of 54% to $13.5 million for the quarter. In addition, SoundHound’s accumulated subscriptions and bookings nearly doubled to $723 million, while query volume increased approximately 90% year-over-year.

The company is also rapidly expanding its presence in the customer service space. SoundHound recently acquired Amelia, an enterprise-focused conversational AI company, to accelerate growth in this market. The combined entity will serve nearly 200 prominent clients, including leading global banks and Fortune 500 companies.

The SoundHound voice assistant with generative AI capabilities is also gaining significant traction in the automotive industry. For example, multiple Stellar brands including Peugeot and Alfa Romeo have gone into full production with SoundHound Chat AI. In addition, the company has signed a contract with an unnamed American electric vehicle manufacturer to integrate its assistant across its entire fleet.

The bottom line? SoundHound’s massive order backlog of $723 million provides excellent revenue visibility. As the company fulfills these contracts, it is poised for explosive growth in the coming years.