If you’re aiming for stocks with significant return potential, targeting companies in rapidly growing industries can enhance your chances of success. Smart investments typically involve getting in early on fast-developing companies that possess substantial growth potential within their sector.
Below are two promising candidates that may see their stock prices multiply by ten over the next few years.
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1. SoundHound AI
The stock price of SoundHound AI (SOUN 0.91%) has experienced volatility, currently boasting a 342% increase since the conclusion of 2023. This surge is attributed to rising demand for its AI-driven voice technology.
In the first quarter, SoundHound’s revenue more than doubled compared to the previous year, driven by its acquisition of Amelia, which enhanced its technology offerings across diverse sectors, including retail and healthcare.
AI significantly influences how customers interact with restaurants and car services, which are among SoundHound’s primary markets. The company’s performance is promising, with a tenfold increase in new restaurant deployments this quarter compared to last year. Though SoundHound has not yet turned a profit, with a non-GAAP loss of $22 million against quarterly revenue of $29 million, its future revenue streams appear robust. Notably, its proprietary AI technology, developed over two decades, positions it well within a rapidly expanding market expected to grow from $3 billion in 2024 to over $20 billion by 2030.
2. Duolingo
Online language learning is another rapidly expanding sector benefiting from AI advancements. Since its inception in 2012, Duolingo (DUOL 0.41%) has become the top-grossing mobile learning app on both Google Play and the Apple App Store, with its stock soaring 241% since its IPO in 2021.
Duolingo simplifies language learning, attracting 130 million monthly active users, a 33% year-over-year growth. With 46.6 million daily active users last quarter—up 49% year-over-year—the app’s engagement is noteworthy.
Operating on a freemium model, Duolingo generated $230 million in revenue in the last quarter, representing a 38% increase from the previous year, alongside a profit of $35 million. The online language learning market is projected to grow at an annualized rate of 21%, reaching $44 billion by 2030, supported by AI-enabled personalization and improvements in the learning experience. Moreover, Duolingo’s content diversification strategy, including courses beyond language learning, enhances its long-term growth potential.
Currently, Duolingo’s market cap is $21.8 billion, with shares valued at $480. For a tenfold return in the next decade, it would need to increase its market cap to $210 billion, maintaining an annualized revenue growth rate of 25%. Given its current revenue growth rate exceeds 40%, coupled with its expansion strategies, Duolingo presents a compelling opportunity for investors seeking significant returns.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool recommends Duolingo. The Motley Fool has a disclosure policy.
