2 AI Stocks Down More Than 45% to Buy in March

The rise of artificial intelligence (AI) technology holds great promise for investors looking for significant returns. It is expected that the productivity improvements driven by AI could contribute trillions of dollars to the global economy over time.

After an impressive run in recent years, the top AI stocks have seen a decline in value this year. Investors who keep their gaze on long-term trends can view this pullback as a chance to secure future profits. Here are two stocks that are currently undervalued and present a strong buying opportunity.

1. SoundHound AI

SoundHound AI (SOUN) is recognized as a frontrunner in voice assistant technology and is experiencing strong growth in revenue. However, the stock has dropped by 49% year to date, largely due to the revelation that Nvidia sold its stake in the company. This sell-off appears to be an overreaction, making it an excellent time to invest.

SoundHound and Nvidia have collaborated on AI solutions for vehicles, which were showcased at CES earlier this year. SoundHound is also set to present at Nvidia's upcoming GTC 2025, highlighting its advancements in voice assistant technology using generative AI.

The company's revenue nearly doubled recently, partially thanks to its acquisition of Amelia, which has helped SoundHound extend its market beyond vehicles and restaurants into sectors like retail, banking, and healthcare. In Q4, it further ventured into the energy sector by partnering with one of the largest electric utilities in the U.S.

The future is promising for SoundHound. Management mentioned during the Q4 earnings call that there are many new opportunities on the horizon and that it is continually enhancing its product capabilities to increase customer value. The revenue guidance for 2025 has been raised to a range of $157 million to $177 million, which represents a 96% increase at the midpoint.

While the price-to-sales ratio is 45, indicating the stock may seem pricey, the company is expected to grow into its valuation. With a current market cap of $4 billion, SoundHound has significant room for growth in the next decade.

2. Dell Technologies

As tech companies invest billions to improve their infrastructure for AI workloads, Dell Technologies (DELL) is in a strong position to benefit. The global AI server market is projected to expand from $31 billion in 2023 to $430 billion by 2033. Dell earns most of its revenue from PC sales, but 46% comes from its infrastructure solutions group, which includes servers.

Currently, Dell's stock is down 46% from its peak in 2024 and 17% year to date, primarily due to fears around tariffs impacting its supply chain. Despite these concerns, Dell believes it has a robust supply chain and is well-equipped to manage any short-term challenges accompanying tariffs. The long-term potential for the company remains strong.

Recently, Dell secured a deal with xAI, the creator of the Grok large language model, boosting its AI server backlog to $9 billion. Also, its infrastructure solutions sector saw a 29% revenue growth in 2024, totaling $43.6 billion, which helped offset a decline in PC sales. For 2025, Dell forecasts an 8% increase in revenue and a 14% rise in adjusted earnings per share, driven by server demands.

Beyond just servers, Dell is also seeing increased demand for its traditional servers and storage solutions, particularly for its PowerStore product which has had strong sales over the past four quarters. This indicates Dell is providing additional value for customers and maintaining its competitive edge in the market.

Moreover, Dell anticipates that the market for AI hardware and services will grow at an annualized rate of 33%, reaching $295 billion by 2027. Their PC division is also expected to see improved demand as businesses and consumers upgrade to AI-ready PCs, with the end of Microsoft's support for Windows 10 serving as a catalyst for increased PC sales.

Currently, Dell's stock is attractively priced, trading at 10 times the estimated earnings for 2025, and it offers a dividend yield of 2.2%. This valuation reflects the challenges faced by Dell's PC business, but strong growth in infrastructure solutions suggests considerable upside potential for investors.

AI, Stocks, Investment