2 Hypergrowth Pure-Play AI Stocks to Buy and Hold for the Next Decade

Finding artificial intelligence (AI) stocks to buy now and hold over the next decade is tricky. Nobody knows for sure what AI will hold, but every investor knows that buying now gives the best shot at maximum returns. The question is, which ones to buy?

I've got two rapidly growing stocks that look like strong stock picks for the next decade. However, there is an increased risk with these two, so returns aren't guaranteed. But if they do pan out, they could easily crush their peers.

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SoundHound AI

SoundHound AI (NASDAQ: SOUN) is involved in a critical area of AI. Currently, most interactions with generative AI are via a keyboard.

However, talking to a generative AI agent is also possible with some platforms. The application of that technology is massive and has the potential to automate a lot of jobs in the customer service industry. SoundHound AI helps facilitate that automation and has already rolled out its products in restaurant drive-throughs in several chains.

While this market is relatively small, SoundHound AI could grow into a massive entity if it can automate customer service interactions in the financial, healthcare, and insurance industries. It's already signing customers in these sectors and could lead to major growth down the road.

During its most recent quarter, revenue rose 52% year over year, but various acquisitions skew some of the growth SoundHound AI reports. It made another one in the first quarter with its LivePerson acquisition and now targets a minimum of $350 million to $400 million in revenue by the end of 2027. For reference, SoundHound AI has generated $184 million in revenue over the past 12 months. That's solid growth ahead, but investors will want to see more over the next decade, especially if it can break into one of those key industries.

With SoundHound AI focused on growing its platform, it shouldn't come as a surprise to investors that it's deeply unprofitable. It posted an operating loss margin of 118% in Q1, which is a deep hole to claw out of. However, if it can rapidly grow over the next decade, it may turn into a highly profitable company once growth isn't the primary focus.

I think SoundHound AI is a solid, long-shot investment. If it pans out, it will be a monster stock. On the flip side, SoundHound AI's business may be disrupted by a larger AI player, so success is far from guaranteed.

Nebius

Nebius (NASDAQ: NBIS) is a completely different company in the AI realm. It's known as a neocloud company, which indicates it is a cloud computing business that's entirely focused on AI.

Nebius has a full-stack offering that gives its clients everything they need to train and run AI applications, and its product is becoming a hit. It has landed major contracts with Microsoft (NASDAQ: MSFT) and Meta Platforms, and Nvidia has also taken a stake in the business. The Nvidia deal gives Nebius early access to new technologies, making it a critical company to partner with to understand the capabilities of new technology before it's widely rolled out.

All of this has resulted in a booming business, with Nebius' revenue rising a jaw-dropping 684% in Q1. That's not a flash in the pan, either. Wall Street analysts are bullish on Nebius' future, with 550% revenue growth expected this year and 219% projected in 2027. That's monster growth that will transform the business and make investors a ton of money, but there's something to watch out for.

From a profitability standpoint, Nebius posted an operating loss margin of 32%, which is far better than SoundHound AI's. While it's not fully profitable, with Nebius's rapid growth rates, it will easily be able to bridge the gap between losses and profits as it grows into its new business over the next decade.

Nebius' success or future isn't in question, but its business economics may be. Nebius is raising and borrowing capital to expand its data center footprint. This creates a bit of an unstable future if the return on investment is a bit lower than they hoped. Nebius will need the AI build-out to continue and customers to stay on long after its completion to transform from a money-losing business to a profitable one.

However, there are several cloud computing companies that have already achieved success in this realm, so Nebius could still be successful. Still, it's far from guaranteed, although I like its chances more than SoundHound AI's.

Keithen Drury has positions in Meta Platforms, Microsoft, Nebius Group, Nvidia, and SoundHound AI. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, and SoundHound AI. The Motley Fool has a disclosure policy.