Investors are constantly looking for the next big thing: companies poised for exposure growth that can deliver significant returns on their investments.
These “growth stocks” often operate in exciting, emerging markets and possess disruptive technologies or innovative business models. They carry tremendous risk, but early investors can potentially reap a sizable reward.
We’ll look at two growth stocks that might be flying under Wall Street’s radar: SoundHound AI (NASDAQ: SOUN) and SoFi Technologies (NASDAQ: SOFI). Both of these companies operate in rapidly growing markets, but they also face unique challenges. To see if one of these stocks is worth investing in for you, keep reading:
SoundHound AI (SOUN): The Voice of the Future?
SoundHound AI (SOUN) is a company at the forefront of voice-enabled artificial intelligence (AI) technology. They develop software that uses AI to make voice-activated devices smarter and more accurate. They envision a future where you can use AI to search the web and seamlessly interact with your smart home.
The market for voice assistants and AI-powered devices is growing explosively. According to Grand View Research, the smart speaker market is expected to grow at a rate of 22.2% by 2030. And that isn’t the only industry SoundHound’s developments could be used in.
Why SoundHound AI Could Be a Growth Stock
SoundHound AI boasts many advantages that position it well for potential growth:
- Proprietary Technology: This company invests heavily in developing its own software recognition and AI capabilities. SoundHound AI is known for its accuracy, speed, and ability to handle natural language. These factors set it apart from competitors.
- Strategic Partnerships: SoundHound AI has already partnered with huge industry leaders, such as Samsung. These partnerships can allow SoundHound AI to grow its customer base. For instance, with Samsung, they are aiming to revolutionize voice-activated drive-thrus where AI takes customers’ orders.
- Recent Developments: SoundHound AI is growing rapidly. For instance, they just purchased Allset to bring AI ordering to more drive-thrus. It’s these active developments that show the company is growing and moving forward.
SoundHound AI’s Challenges
Despite the strong outlook, SoundHound AI is still actively facing challenges that you should consider:
- Competition: The voice assistant market is crowded with many established players like Google Assistant and Amazon Alexa. SoundHound AI needs to effectively differentiate itself to carve out a portion of the market.
- Monetization: While SoundHound AI has a strong technology base, the company still needs to refine its strategy for effectively monetizing its offerings. The technology is there, but they need to find its purpose in the real world.
SoFi-Technologies: Redefining Finance for the Next Generation
SoFi Technologies (SOFI) is shaking things up in the traditional financial services industry. This FinTech company offers a comprehensive suite of financial products specifically tailored towards millennials and Gen Z.
They’ve developed a platform where you can manage just about all of your financial needs, including managing your student loans, investing, and getting a mortgage. Their fees are much lower than many other platforms, as well.
The FinTech industry is also booming, with a growing need for accessible financial solutions. According to Fortune Business Insights, the global FinTech market will grow around 16.5% through 2032.
Why SoFi Could Be a Growth Stock
SoFi is well-positioned to capitalize on the growth of the FinTech industry:
- Unique Value Proposition: SoFi caters to a specific demographic with unmet needs. They offer student loan refinancing, competitive interest rates, and user-friendly tools for budgeting and investing. This focus on the young generation sets them apart from traditional banks and other financial institutions.
- Recent Achievements: SoFi has capitalized on some serious growth since 2023, even as other small banks fumbled. They reported 1.3 million new members in the past two quarters alone. Plus, they ended 2023 with $15.7 billion in customer deposits, a surprising figure.
SoFi’s Challenges
That said, SoFi still has some significant hurdles to overcome:
- Established Competition: While SoFi caters to a very specific niche, it still faces stiff competition with established banks (who have vast brand recognition and resources). SoFi needs to continue innovating and building brand loyalty to solidify its position.
- Profitability: One place SoFi has always struggled is with its profitability. The company has a relatively short track record compared to traditional banks, and that scares many investors away.
A Look Ahead: Considering Growth Stocks
SoundHound AI and SoFi Technologies represent exciting opportunities for investors seeking high-growth potential. Both companies operate within rapidly expanding markets that are expected to grow well over the next decade. SoundHound AI’s voice-enabled AI technology could revolutionize how we interact with devices, while SoFi’s FinTech platform offers a compelling value proposition for a generation seeking new ways to manage their finances.
However, both of these companies are also incredibly risky. There is no promise that their industries will grow as expected or that either company will lead in its respective industry. They’re both surrounded by intense competition, including some very big names.
It’s important to understand that while both of these stocks are potentially very profitable, it’s incredibly risky. Consider your risk tolerance and investment goals. You can also read about more reasons to buy SoFi Technologies before you make your decision.
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