Super Micro Computer vs. SoundHound AI: What's the Better Artificial Intelligence Stock to Buy Today?
Investors are debating between Super Micro Computer and SoundHound AI as potential artificial intelligence stocks to buy. Both companies offer unique opportunities in the AI sector, but the question remains - which one is the better investment today? With the growing demand for AI technology, choosing the right stock could lead to significant returns for investors. Analysts are closely watching the performance of these two companies to determine the best choice for maximizing financial gains.
If you're investing in artificial intelligence (AI) stocks, chances are you've seen some mention of Super Micro Computer (SMCI) and SoundHound AI (SOUN). While these aren't the biggest players in AI, they are among the most intriguing. The two companies face challenges, but they also possess a lot of possible upside.
Super Micro Computer
Super Micro Computer, which is better known as Supermicro, is involved in providing businesses with AI infrastructure, data servers, and the necessary hardware they need to ramp up their AI investments and projects. Although it's up more than 40% this year (as of June 13), its low valuation suggests that it still struggles to win back the trust of investors after having a very public falling out with its auditor last year.
Supermicro provides valuable AI infrastructure that businesses need to scale their operations. Over the trailing 12 months, the company generated $21.6 billion in sales, with its profits totaling $1.2 billion. Although its margins are lean, the company was able to consistently stay in the black and grow its earnings over the years.
Investors discounted the stock heavily since the adversity and bad press it faced last year, and it now trades at just 13 times its expected future earnings (based on analyst estimates). Although it has been rallying this year, it's still nowhere near its 52-week high of $101.40 and could have more room to run higher.
SoundHound AI
SoundHound AI rose to prominence last year after chipmaker Nvidia disclosed a position in the voice AI company. But with Nvidia recently selling its stake in the business and SoundHound still struggling to stay out of the red, many investors have also hit sell on this once-exciting AI stock.
SoundHound AI is in a great position to benefit from companies seeking out voice AI capabilities. Revenue in its most recent quarter rose by 151% year over year to $29.1 million. The company got a boost from acquisitions, which have also diversified its customer base in the process.
Although it remains unprofitable, SoundHound AI's business is smaller than Supermicro's, and that can work to its advantage. Given the potential it has to reach many industries and the rollout of Amelia 7.0, the company's valuation may rise significantly as it scales its operations.
Which stock should you go with?
If I were choosing between these two AI stocks right now, I'd go with Supermicro. Its operations appear to be more stable now, and there aren't huge question marks about its reporting hanging over the business. Its low valuation offers a good margin of safety.
SoundHound AI is an intriguing business, and it may have greater upside in the long run if it proves to be the real deal. However, it's a riskier option than Supermicro, which is why I'd opt for the latter.