Can These Artificial Intelligence (AI) Stocks Maintain Their Meteoric Growth Trajectory?

The broader U.S. stock market has enjoyed a remarkable run since artificial intelligence (AI) emerged as a game changer in early 2023. However, not all AI stocks have participated in this rally equally. Some, like SoundHound AI (SOUN), Palantir Technologies (PLTR), and Meta Platforms (META), have soared to incredible heights, while others have lagged behind. The question on investors' minds is whether these AI stocks can maintain their meteoric growth trajectories.



SoundHound AI: A Rising Star in Audio AI Technology
SoundHound AI specializes in audio and conversation-based AI technology, which is more complex than text-based prompts. The company started in the automotive industry, powering conversational AI for vehicles, and has since expanded into the restaurant industry and other applications. Its revenue grew 89% year over year in the third quarter, and management raised guidance for the fourth quarter. However, the company's stock is currently expensive, trading at a ratio of 31 times 2025 revenue estimates. This high valuation makes it difficult for the stock to continue its current pace of growth.

Palantir Technologies: A High-Flying AI Software Company
Palantir Technologies is a cloud-based data-mining specialist that has seen its stock price soar 900% over the past two years. The company's AI-driven platforms, Gotham and Foundry, cater to the growing demand for AI-driven solutions in various industries. Palantir's customer count has been increasing, with 498 commercial customers as of the September-ended quarter, up 51% year over year. However, the company's shares have risen significantly, with a PEG ratio of 5, which is higher than the typical range of 2 to 2.5 for even the best stocks. Investors may be concerned about the stock's ability to maintain this pace of growth.

Meta Platforms: A Social Media Giant Embracing AI
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, has seen its stock price surge over 400% since the beginning of 2023. The company is deeply involved in AI technology, with massive data center investments, an open-source AI model (Llama), and an entire business unit devoted to AI and metaverse products and services (Reality Labs). Meta's AI integration has driven growth in its core business and increased its pricing power. However, the company's valuation is relatively low, with a PEG ratio of 1.3, suggesting that it may have room to grow.

Can These AI Stocks Maintain Their Growth Trajectories?
The answer is a mixed bag. While these AI stocks have demonstrated extraordinary fundamentals and growth potential, their valuations are a concern. SoundHound AI and Palantir Technologies are currently expensive, trading at ratios of 31 and 5, respectively. Meta Platforms, on the other hand, is relatively undervalued, with a PEG ratio of 1.3.

Investors should consider the potential risks and challenges facing these AI stocks, such as high valuations, small revenue bases, and the need to maintain competitive edges. However, the overall growth potential of the AI market and the unique positions of these companies in the AI value chain make them attractive long-term investments.

In conclusion, while these AI stocks have demonstrated remarkable growth trajectories, their ability to maintain this pace depends on various factors, including their valuations, fundamentals, and the broader AI market's growth prospects. Investors should carefully consider these factors when evaluating these stocks and remain vigilant for any changes in the market landscape.