Prediction: 2 Stocks That Will Be Worth More Than SoundHound AI 1 Year From Now

Shares of SoundHound AI have dropped more than 52% in 2025 as of this writing. That isn't surprising, considering the stock was trading at an extremely rich valuation at the start of the year, following a big surge in 2024.

The voice artificial intelligence (AI) solutions provider shot up a stunning 835% last year. As a result, it was trading at a whopping 90 times sales at the beginning of 2025. This expensive valuation has led investors to book their profits in SoundHound stock amid the broader stock market uncertainty caused by factors such as the tariff-fueled trade war and the conflict in the Middle East.

The sharp decline in SoundHound stock has brought its market cap to $3.83 billion. It won't be surprising to see the stock head lower, as it is still trading at 34 times sales, which is more than 4 times the U.S. technology sector's average sales multiple. However, there are a couple of stocks trading at much more reasonable valuations and benefiting from the fast-growing demand for AI products and services in their respective niches.

We will take a closer look at those two names and examine why they could potentially overtake SoundHound's valuation in the coming year.

Image source: Getty Images.

1. DigitalOcean Holdings

DigitalOcean's (NYSE: DOCN) on-demand cloud computing platform is used by start-ups, small businesses, and developers to build and deploy applications in the cloud, manage their databases, and store data, among other things. The company currently has a market cap of $2.54 billion, which is about 50% below that of SoundHound.

However, DigitalOcean is trading at an extremely reasonable 3.3 times sales. Importantly, the company's growth has been picking up, thanks to the fast-growing demand for AI applications in the cloud. DigitalOcean gives customers access to powerful graphics cards from the likes of Nvidia and AMD, enabling them to build generative AI applications and run other AI-related workloads, such as model training and inference, without having to invest in expensive hardware.

It has also launched a platform to help customers develop and deploy AI agents. Not surprisingly, the company has witnessed solid traction for its AI-related offerings. Its annual recurring revenue (ARR) from AI services shot up an impressive 160% year over year in the first quarter. The company's generative AI platform, released in January of this year, enables customers to build and launch AI agents and is already being used by more than 5,000 customers.

All this explains why DigitalOcean's average revenue per user increased by an impressive 14% year over year in the first quarter. As a result, the company's adjusted earnings increased by 30% year over year in the quarter, substantially outpacing the 14% increase in its revenue. The good part is that DigitalOcean is likely to sustain its healthy growth rate for a long time to come, as it is targeting a $140 billion addressable opportunity.

Moreover, the company's ability to win a bigger share of its customers' wallets is expected to drive a nice acceleration in its bottom-line growth going forward, following a flat performance in 2025. DigitalOcean is expecting $1.90 per share in earnings this year, which would be nearly flat compared to last year, owing to the capital investments the company is making to bolster its AI infrastructure to meet the increase in demand.

However, its growth is expected to pick up in the future.

DOCN EPS Estimates for Current Fiscal Year data by YCharts. EPS = earnings per share.

So, it is easy to see why analysts expect DigitalOcean stock to jump 35% in the coming year, based on its median price target of $37.50. If SoundHound stock continues to drop due to its expensive valuation and DigitalOcean hits the 12-month price target, thanks to its AI-fueled growth, it may be able to overtake the former's market cap.

2. Ambarella

Ambarella (NASDAQ: AMBA) is another fast-growing company that's benefiting from the growing adoption of AI in applications such as security cameras, drones, automotive, and other Internet of Things (IoT) devices. Ambarella's computer vision processors are deployed in these applications, and the demand for these chips has picked up nicely, thanks to AI.

Edge AI chips produced 75% of Ambarella's revenue in the first quarter of fiscal 2026 (which ended on April 30). Its top line increased by 58% year over year to $86 million. What's more, Ambarella swung to a profit of $0.07 per share as compared to a loss of $0.26 per share in the same quarter last year. What's worth noting is that Ambarella's AI chips are not just driving solid growth in sales volumes but also having a positive impact on its margins, owing to higher average selling prices (ASPs).

Looking ahead, Ambarella estimates that its serviceable addressable market for edge AI processors could jump to almost $13 billion by 2031, growing at an annual rate of 18% over the next five years. Management, however, is confident of growing at a faster pace than the addressable market. So, Ambarella seems to be in a nice position to sustain its healthy growth rate for a long time to come.

This is also evident from an improvement in Ambarella's earnings estimates.

AMBA EPS Estimates for Current Fiscal Year data by YCharts. EPS = earnings per share.

The potential growth Ambarella is forecasted to deliver makes the stock a no-brainer buy right now, as it is trading at less than 7 times sales. The company's market cap currently stands at $2.2 billion. However, that market cap could rise remarkably in the coming year as Ambarella's 12-month price target, according to 15 analysts covering it, points toward a 55% spike in its stock price.

Ambarella could indeed deliver such impressive gains thanks to its robust pace of growth. And if SoundHound stock continues to head lower because of the reasons discussed earlier in this article, Ambarella's stock price jump in the coming year could be enough for it to become more valuable than the voice AI solutions provider.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, DigitalOcean, and Nvidia. The Motley Fool has a disclosure policy.