Many artificial intelligence (AI) stocks have generated fantastic gains for investors over the past couple of years. Even if you didn’t invest early in this trend, you still could have made good returns last year by investing in some top performing AI stocks.
For instance, Palantir Technologies (PLTR -2.52%), SoundHound AI (SOUN -16.44%), and Nvidia (NVDA -0.02%) all proved to be tremendous investments in 2024. If you had invested $7,000 into each of these stocks at the start of last year, you would have a portfolio worth more than $120,000 by the end of the year, a near five-fold increase in pre-tax wealth. Here’s a look at how well each of these stocks did, and whether or not it’s too late to invest in them today.
Palantir Technologies
Data analytics specialist Palantir Technologies has been leveraging AI to enhance its products and services. It’s a big name in counterterrorism and intelligence, with governments clients around the world. It has also been experiencing a lot of growth on the commercial side, developing solutions that can help a wide range of businesses make better decisions.
The company has held hundreds of boot camps to introduce potential customers to the Palantir Artificial Intelligence Platform (AIP) and help those businesses understand the use cases for that software. The results have been terrific. CEO Alex Karp has described the resulting demand for AIP as “unrelenting,” and sales continuing to accelerate. While Palantir’s growth rate was declining in recent years, the tide turned in 2024.
PLTR Operating Revenue (Quarterly YoY Growth) data by YCharts.
Now, with Palantir consistently profitable and a newly minted S&P 500 component, investors remain extremely bullish about the stock. An investment of $7,000 into the business a year ago would be worth more than $33,000 by the end of 2024.
The danger in buying or holding this AI stock today, however, is that it trades at around 118 times next year’s expected profits — a massive premium. Unless you’re incredibly bullish on the stock and are comfortable with the risk of a possible correction this year, you may want to consider cashing out. I’d be surprised for the stock to offer up a repeat performance in 2025.
SoundHound AI
The smallest company on this list is voice AI specialist SoundHound AI, which has a market cap of around $5.5 billion. Late last year, its stock price took off after the company delivered strong quarterly results and kept rising as it announced deals with several restaurant chains.
In early December, it said that Torchy’s Tacos, a popular regional taco chain, had rolled out the company’s AI Smart Ordering service at all of its 130 locations. Later that month, it also announced that Church’s Texas Chicken would give its customers the option to use SoundHound’s AI in drive-thrus to help expedite the ordering process.
Given that SoundHound’s business that is still in the early stages of growth and that it faces a lot of competition, news of more companies adopting its technology can have a real impact for its business and, in turn, enhance the market’s confidence that this may be the real deal. The business isn’t profitable yet, but SoundHound reported 89% revenue growth in the third quarter to $25.1 million. Its net loss grew by 8% to $21.8 million, but investors appear to be willing to be patient with the business given its attractive growth opportunities in not just the fast-food industry but in the automotive sector and other areas.
Driven by SoundHound stock’s strong rally toward the end of last year, a $7,000 investment in its shares a year ago would’ve been worth nearly $70,000 b the end of 2024. But as with Palantir, I’d be concerned that SoundHound’s valuation has become a bit too rich, so it may not be able to do nearly as well this year. The first week of 2025 has been volatile for this stock, but it’s too early to assess where the stock might be headed. Currently, the stock trades at 68 times its trailing-12-month revenue.
Nvidia
Nvidia’s presence on any list of 2024’s great AI stocks should surprise no one. The chipmaker has been providing the processing power for a lot of AI-powered initiatives with its cutting-edge graphics processing units (GPUs). With a market cap now in excess of $3 trillion, Nvidia is one of the most valuable companies in the world, and has been a top growth stock to buy and hold in recent years.
What’s truly impressive about Nvidia is that it continues to post impressive top- and bottom-line growth. During the nine-month period ending Oct. 27, its revenue totaled $91.2 billion — a 135% increase from the same period last year. And it achieved that while maintaining an exceptionally high profit margin of 56% as its bottom line soared from $17.5 billion to $50.8 billion.
To just grow revenue is one thing, but Nvidia’s profits are also taking off. That’s why of these three companies, it’s the most reasonably valued one and the investment which may still have more near-term upside. it’s trading at 35 times next year’s estimated profits and its price-to-earnings growth ratio is right around 1, signifying that it’s a good value for long-term investors.
If you invested $7,000 into Nvidia’s stock a year ago, your shares would’ve been worth over $19,000 at the end of 2024. Combined with the other stocks on this list, $7,000 invested across all these companies would have created a portfolio worth approximately $122,000 entering the new year.
