Nvidia's Growth Is Slowing. Here Are 2 Lesser-Known AI Stocks With Monster Return Potential.

Nvidia continues to be the runaway leader in chips used for artificial intelligence (AI). The company's leading position in the data center market has driven triple-digit revenue growth over the last few years. Nvidia is now one of the most valuable companies in the world, with a $3.4 trillion market cap at present.

However, with $113 billion in trailing revenue, Nvidia has become a very large business, which will make it more difficult to maintain this level of growth. Nvidia's top-line growth is already slowing from triple-digit rates, coming in at 94% year over year in the most recent quarter. The stock soared on accelerating growth, but slowing growth could weigh on shareholder returns over the next few years.

The good news is there are plenty of other opportunities to profit off the AI arms race. If you're looking for smaller AI companies that can potentially deliver monster returns, here are two to consider buying heading into 2025.

1. SoundHound AI

Shares of this AI voice-solutions provider have given investors a wild ride over the last few years, but the stock is surging following another strong quarter of growth. As its latest results show, SoundHound AI (SOUN -0.78%) is still a relatively small company going after a big opportunity.

The company's revenue grew 89% year over year in the third quarter, which was partly boosted by a recent acquisition and expanding market demand for its AI voice solutions. It continued to see double-digit growth from automotive, but it's also having success diversifying into customer service and retail-banking solutions through its acquisition of Amelia.

While SoundHound's business is still unprofitable -- it reported a loss of $22 million on just $25 million of revenue last quarter -- the stock is moving higher because the company is showing that there is, indeed, a large and growing market for its technology. SoundHound's AI agents are helping reduce the number of calls coming into customer support centers.

Moreover, its Smart Ordering AI service for restaurants recently crossed the 100 million customer-interaction milestone. Major restaurant brands, like Chipotle Mexican Grill, Jersey Mike's, and Applebee's, are using SoundHound's technology.

The company is also positioning itself as a leader in generative AI voice assistance for drivers. A recent survey commissioned by tSoundHound with Big Village found that 76% of U.S. drivers would use an AI-powered voice assistant if it was available in the car. This could be a huge opportunity over the long term, since nearly half of drivers expressed frustration in finding and operating car features.

SoundHound's voice assistance could prove to be a must-have for car manufacturers and already has a strong foothold in the market. A partnership with Stellantis, owner of the Jeep, Dodge, and Ram line of vehicles, has brought SoundHound's generative AI assistance to several of the company's European brands, including Alfa Romeo, Peugeot, and DS Automobiles.

Although the stock has jumped sharply in the last few months, I wouldn't be afraid of starting a position here. SoundHound is growing at a brisk pace and has a market capitalization of just $3.4 billion. I would look at the stock's recent advance as a bullish indicator of the future. While the shares will be volatile, an investment in SoundHound could be very rewarding over the next decade as the business expands into retail and banking.

2. Astera Labs

The insatiable demand for Nvidia's chips can point you to other opportunities in the AI infrastructure market. Astera Labs (ALAB 12.69%) is a leading supplier of connectivity products for data centers.

These products allow data to be transmitted between chips and are just as essential as the graphics processing units (GPUs) from Nvidia for enabling AI training. With demand for its products surging, Astera Labs just completed its initial public offering (IPO) earlier this year and could be looking at years of strong growth.

Astera Labs' revenue grew 206% year over year in the third quarter, which shows the company emerging as a leader in this market. "Our business has now entered a new growth phase with multiple product families ramping [up] across AI platforms based upon both third-party GPUs and internally developed AI accelerators," CEO Jitendra Mohan said.

The stock looks very expensive. Astera Labs generated only $305 million in trailing revenue, which doesn't appear to be enough to support its $16 billion market value. But investors are paying a high valuation, expecting the company to maintain a high level of growth for several more years -- and there are a few reasons why it can meet those expectations.

The company is diversifying its product lineup, which is also expanding its addressable market opportunity. Importantly, management is investing in products that can drive higher profitability over the long term. For example, Astera's new Scorpio Smart Fabric switches help data centers improve performance and command high average selling prices that could be beneficial to margins.

Astera Labs earns a high gross margin of nearly 78%, which means customers are willing to pay a premium for its products. The company's adjusted net income was $40 million in Q3 on $113 million of revenue -- a stellar profit margin of 35%.

AI is a major long-term growth catalyst for chip suppliers and other infrastructure companies. There will be more data centers and AI servers built over the next 10 years. Adding shares of a fast-growing supplier like Astera Labs could help you profit off that opportunity.