2 Artificial Intelligence Stocks That Could Deliver Explosive Gains

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

A study by the World Economic Forum, an international organization for public-private cooperation, found that 70% 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 actively seek opportunities within this megatrend. While the AI landscape offers many investment options, two companies currently stand out as particularly promising. Let's delve into the core investment thesis for these two high-potential AI stocks.

Recursion's revolutionary approach

Recursion Pharmaceuticals (NASDAQ: RXRX) is pioneering a unique approach to drug discovery by leveraging AI and machine learning. The company's Recursion OS platform uses sophisticated algorithms to analyze vast biological and chemical datasets, uncovering potential drug candidates at an unprecedented scale and speed. Wall Street analysts see a significant upside, with the consensus 12-month price target implying nearly 65.9% potential gains from current levels.

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

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

Together, Recursion and Exscientia have collaborations with major pharmaceutical companies like Roche, Bayer, and Sanofi. These partnerships could generate over $20 billion in potential milestone payments.

Integrating Exscientia's precision chemistry tools with Recursion's biology exploration platform could accelerate drug discovery timelines and improve candidate quality. Recursion's stand-alone business is also making strides.

The company recently announced that Roche/Genentech optioned its first neuroscience phenomap, triggering a $30 million payment. This development validates Recursion's unique mapping approach to drug discovery.

SoundHound's voice AI dominance

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

What's driving this optimistic outlook? SoundHound's Q2 2024 results demonstrated strong momentum across key metrics. The company reported impressive year-over-year revenue growth of 54%, reaching $13.5 million for the quarter. Moreover, SoundHound's cumulative subscriptions and bookings backlog nearly doubled to $723 million, while query volume surged approximately 90% from the previous 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 marquee customers, including top global banks and Fortune 500 companies.

SoundHound's voice assistant with generative AI capabilities is gaining significant traction in the automotive industry as well. For example, multiple Stellantis brands, including Peugeot and Alfa Romeo, have gone into full production with SoundHound Chat AI. Additionally, the company signed a contract with an unnamed U.S. 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 delivers on these contracts, it's poised for explosive top-line growth in the coming years.

Should you invest $1,000 in Recursion Pharmaceuticals right now?

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George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Roche Holding AG and Stellantis. The Motley Fool has a disclosure policy.