Technically speaking, stocks with the potential for exponential growth simply show a pattern of sharper increases over time. Practically speaking, we’re really talking about finding firms with the ability to produce rapid returns over a shorter period.
These companies could be referred to as unicorns, as we’re seeking to identify particularly strong companies that are rare. It shouldn’t surprise any readers that artificial intelligence (AI) plays a big factor in creating unicorns.
That isn’t to say all the firms listed below are particularly reliant on AI. However, two of them are. Anyway, let’s take a look at these companies that promise to produce rapid returns.
SoundHound AI (SOUN)
SoundHound AI (NASDAQ:SOUN) continues to get a lot of consideration because it is highly associated with AI stocks. It probably helps that the company has the acronym AI in its name.
Generative AI has dominated headlines throughout 2023. A lot of investment has poured into firms developing the ability to create text and images.
SoundHound isn’t really related to generative AI. Instead, the company is related to conversational AI, a burgeoning field. Unsurprisingly, conversational AI is exactly what it sounds like — the ability of AI to simulate human language and conversation.
What SoundHound AI does is very useful. For example, the company provides conversational AI for applications such as drive-thru food and call centers. SOUN saw strong demand of late, with revenues that grew by 52% sequentially in the third quarter, reaching $13.3 million.
The reason to believe SoundHound AI may possess exponential growth potential lies in its restaurant AI — in my opinion. The company established relationships with the following restaurants: Bai Mai Thai, Bubbakoos Burritos, Chicken Shack, CoreLife Eatery, Dog Haus, Happy Endings Hospitality, Sam & Louie’s, Tonyburgers and Zeeks Pizza. I’m not sure about you, but I don’t know any of those names. Imagine, though, if SoundHound could sell its conversational AI software to a major chain. That would fundamentally propel the company into a new stratosphere, sending its share price exponentially higher.
Nvidia (NVDA)
I should start by noting that I realize Nvidia (NASDAQ:NVDA) is already one of the largest stocks. The company’s current $1.18 trillion market capitalization makes it one of a handful of companies globally that benefit from massive shareholder support.
Is it likely to triple or quadruple in price anytime soon? No. However, at its current price of $495 and with a high analyst target price of $1,100, a doubling is entirely within the realm of possibility. Thus, it can grow exponentially by a factor of two.
I think that’s important for investors to realize. Nvidia has had such a strong 2023 that many investors might believe there’s little room for growth remaining. I don’t believe that’s the case. Nvidia is going to release its H200 chip in 2024. Businesses may scramble to secure their supply of that chip, which supersedes the company’s hyper-popular H100 chip.
If a set of similar dynamics that played out in 2023 play out again in 2024, investors should fully expect NVDA shares to double from their current price.
Grab Holdings (GRAB)
Grab Holdings (NASDAQ:GRAB) is the Southeast Asian super app created by a company headquartered in Singapore.
The company’s recent price history serves as a strong indication of its potential for exponential growth moving forward. It has only been trading publicly since late 2021. In that time, it has gone from $14 to below $4.
GRAB certainly has problems and hasn’t lived up to its billing as a one-stop shop for all things. That isn’t to say you can’t use the app to access services, but the company simply hasn’t provided strong returns for investors. However, that could be changing. Grab Holdings slashed its losses by 71% during the most recent period, resulting in a $99 million loss. Meanwhile, revenues grew by 61%, reaching $615 million.
With the macroeconomic picture improving and interest rate cuts on the horizon, growth stocks like Grab are returning to fashion. That certainly has the potential to result in rapid increases in share prices.
On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
