Artificial intelligence holds a lot of promise for investors. The technology is poised to add $15.7 trillion to the global economy by 2030, according to PwC. That's a huge opportunity, but with so many companies touting their AI chops, it's difficult to know the best places to invest your money.

Two popular options are the conversational AI company SoundHound AI (SOUN -5.62%) and the semiconductor company Broadcom (AVGO -2.59%). Let's look at each one's AI opportunities to see which company is the best AI stock to buy.

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The case for Broadcom

Broadcom designs application-specific integrated circuits (ASICs), which are used in AI data center infrastructure. These AI chips help some of the world's most prominent tech companies -- including Alphabet and Meta -- stay ahead of the AI curve amid escalating competition.

While there are many ways to benefit from AI, the largest tech companies are choosing to build out massive data centers to train AI models and power advanced AI software and services. Spending on AI data centers could reach an estimated $2 trillion over the next five years, according to Nvidia CEO Jensen Huang.

Broadcom has already benefited from this AI spending bonanza, with the company's artificial intelligence revenue spiking 220% in 2024 to $12.2 billion. And more could be on the way. On Broadcom's recent earnings call, CEO Hock Tan said that over the next three years, there will be a "massive" AI opportunity for the company.

Broadcom's stock isn't cheap. The company's shares have a forward price-to-earnings multiple of nearly 37, compared to the S&P 500's (SNPINDEX: ^GSPC) 24. I don't think that makes Broadcom a stock to avoid, but it's always good to know when you're paying a premium for something.

The case for SoundHound AI

While most people think of AI in the form of a chatbot that you interact with by typing questions, conversational artificial intelligence is quickly gaining momentum. SoundHound AI has some of the best conversational AI available. Its platform is used by Stellantis to bring voice-enabled commands to its vehicle brands, and by Chipotle in its automated drive-thrus.

SoundHound's ability to expand its customer base, which now includes more than 200 enterprise customers, has also helped it diversify its sales. Consider that last year, 72% of SoundHound's revenue came from its largest customers, but they now account for just 12% of sales. Its customers were nearly all concentrated among automakers in 2023, but they're now spread across autos, financial services, restaurants, healthcare, and insurance.

Conversational AI could be worth an estimated $152 billion by 2033, and SoundHound is already reaping the benefits from the increasing demand. The company's sales jumped 89% in the most recent quarter (ended Sept. 30, 2024) to $25.1 million, and management estimates that 2025 sales will double from the previous year, reaching $83.5 million at the midpoint of guidance.

SoundHound's stock has been on a wild ride over the past year, with a huge run-up followed by a recent pullback. But its shares are still up nearly 3x over the past 12 months, and that's made SoundHound AI's stock a bit pricey. The company's shares have a price-to-sales multiple of 50, making the stock very expensive by nearly any standard.

Verdict: Broadcom is the better AI stock

Both of these AI stocks have a promising future, but I'm selecting Broadcom for the win for two reasons: market potential and price.

Tech companies around the globe are ramping up their AI data center infrastructure spending (potentially by $2 trillion), and Broadcom's tapping into it. As the AI wars heat up, I think Broadcom and other companies like it will continue to see increasing hardware demand.

While Broadcom's stock isn't exactly cheap, it still looks less expensive than SoundHound. I'd feel far more comfortable paying a bit of a premium for data center infrastructure stock at a time when spending is ramping up than paying a hefty price for a conversational AI stock where the long-term market demand may not be as high.