SoundHound AI will benefit from the growing demand for custom speech recognition tools.
CoreWeave is helping companies handle their AI tasks remotely.
Nebius’s cloud-based AI infrastructure platform has targeted many large companies.
10 stocks we like better than SoundHound AI ›
With the market hovering near all-time highs, it may seem like a precarious time to invest in high-growth tech stocks. After all, many ambitious companies trade at premiums, and in a market downturn, those premiums can be squeezed quickly.
However, if you plan to hold on to stocks for at least another decade, short-term stress won’t matter as much. If you focus on these long-term returns, these three breakout growth stocks may still be worth buying in this frothy market: Sound Hound Artificial Intelligence(NASDAQ: SOUN), core weaving (NASDAQ: CRWV)and Nebius (NASDAQ: NBIS).
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SoundHound develops AI-powered audio and speech recognition tools. Its namesake app is used to identify songs from a few seconds of recorded audio or a few buzzy bars. Its Houndify platform generates most of the revenue and drives most of the growth, allowing the company to develop its own speech recognition service.
For those who don’t want to deal with big tech companies like Microsoft or letterIt’s Google. Its growing client list includes car manufacturers such as StrantisRestaurants such as Chipotleas well as credit card giants such as MasterCard.
In the past two years, it has expanded its ecosystem by acquiring AI restaurant service provider SYNQ3, online food ordering platform Allset, conversational AI company Amelia, and customer service AI company Interactions. These acquisitions increase its revenue and exposure in the automated restaurant service and AI chatbot markets.
From 2024 to 2027, analysts expect SoundHound’s revenue to grow at a compound annual growth rate of 51% as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turns positive in the final year. SoundHound’s enterprise value is $5.1 billion, and its stock trades at 22 times next year’s sales, which isn’t cheap. But if you expect AI-powered chatbots to replace more human workers over the next decade, its valuation will likely grow and generate greater gains.
CoreWeave was Ethereum miner. But after the cryptocurrency crash in 2018, it repurposed mining GPUs to remotely handle artificial intelligence tasks. It spent $100 million to upgrade its data centers NVIDIALaunch H100 GPUs in 2022 and use these GPUs as collateral to obtain additional financing to purchase more GPUs and open new data centers.
As of the end of 2022, CoreWeave operates only three data centers. Today, it operates 33 data centers in the United States and Europe. The company claims that its dedicated cloud-based GPUs are approximately 35 times more capable of processing AI tasks than traditional cloud infrastructure platforms and cost 80% less.
CoreWeave’s business is booming as more companies run artificial intelligence applications on its cloud-based GPUs. This approach is simpler, cheaper, and more scalable than running those demanding applications on local servers. That’s why many of the top artificial intelligence companies, including Microsoft and OpenAI, use CoreWeave’s cloud services.
Analysts expect CoreWeave’s revenue and adjusted EBITDA to grow at a compound annual growth rate of 115% and 124%, respectively, from 2024 to 2027 as the artificial intelligence market expands. But with an enterprise value of $61.4 billion, its stock valuation still looks reasonable at less than seven times next year’s sales. Its valuation may be squeezed by near-term concerns about its massive spending and rising debt, but in the longer term it could be a significant long-term investment opportunity in the AI market over the next decade.
Nebius is another cloud-based AI infrastructure service provider. But while CoreWeave primarily handles GPU-intensive tasks, Nebius is a “full-stack” AI infrastructure company that integrates managed software services into its data centers. It also provides customized AI infrastructure services for the data training, education technology and robotics markets.
Nebius is much smaller than CoreWeave. It operates only one first-party data center in Finland and shares others through colocation deals in Missouri, France and Iceland. The company is currently building a second first-party data center in New Jersey. But from 2024 to 2027, analysts expect Nebius’ revenue to grow at a compound annual growth rate of 302%. They also expect adjusted EBITDA to turn positive in 2026 and more than triple in 2027.
Much of that growth should be driven by its new five-year, multibillion-dollar contract with Microsoft and Microsoft. meta platformbut as the AI market expands, it should gain more customers. To support this rapid growth, the company aims to secure 1 gigawatt (GW) of GPU-ready connected power by the end of 2026, while it aims to secure 220 GW of comparable capacity by the end of 2025. With an enterprise value of $26.9 billion, or 48 times next year’s sales, Nebius may seem expensive. But if you expect it to keep opening new data centers to satisfy the AI market’s insatiable demand for more computing power, then it’s probably worth a higher valuation.
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Leo Sun serves on the meta platform. The Motley Fool holds and recommends Alphabet, Chipotle Mexican Grill, Ethereum, Mastercard, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends SoundHound AI and Stellantis, and recommends the following options: long January 2026 $395 calls on Microsoft, short December 2025 $45 calls on Chipotle Mexican Grill, and long January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
3 Breakout Growth Stocks You Can Buy and Hold Over the Next Decade originally published by The Motley Fool
