Investors should expect the stock to be volatile, since the company has yet to report a profit. However, it has a potentially lucrative business model built on earning royalties from volume usage of the product, in addition to subscription revenue. Over time, it could also generate growing revenue from commissions earned when someone completes a transaction using SoundHound’s voice AI.

Management’s guidance calls for revenue to exceed $150 million in 2025 as SoundHound integrates the acquisition of Amelia. This represents an increase of 83% over expected 2024 revenue. The stock has risen 212% over the last year but could reach the Street’s price target in 2025 as SoundHound continues to report more robust growth and expand into new markets.

Urban air transportation could see incredible growth over the next few decades, particularly in the growing adoption of electric air taxi networks. Morgan Stanley has previously predicted the urban air mobility market to reach $29 billion by 2030 before surging to surpass $1 trillion by 2040.

As a leading manufacturer of electric vertical takeoff and landing aircraft, Archer Aviation (NYSE: ACHR) is well positioned to capitalize on this opportunity. Wall Street’s average price target is $9.06, implying upside of 196% over the current $3.01 share price.

Archer has plans with Southwest Airlines and United to launch air taxi networks in major cities. It also has a manufacturing deal in place with Stellantis, which will fund up to nearly $400 million for labor and other capital expenditures for the production of 650 aircraft annually.

With a $6 billion order book, Archer is having no trouble raising capital to fund operations until it receives final certifications from the Federal Aviation Administration (FAA) to launch its commercial service. The company ended the second quarter with $360 million in cash and equivalents.

Wall Street has kept its price target fairly consistent over the last few years. The only thing that has changed is Archer’s share price, which, after the recent sell-off, could be undervaluing the company’s long-term growth. The long-term return potential is massive for a company with a market cap of just $1 billion.

The stock is a great buy at these lower share prices. The FAA has already finalized the airworthiness of Archer’s Midnight aircraft, which sets the stage for the final stages of the certification process. Investors should buy the shares before news of the final FAA certification sends the stock higher.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard has positions in Archer Aviation, Nvidia, SoundHound AI, and Toast. The Motley Fool has positions in and recommends Alphabet, Amazon, Block, Nvidia, and Toast. The Motley Fool recommends Southwest Airlines and Stellantis. The Motley Fool has a disclosure policy.

2 Small-Cap Stocks With Far More Upside Than Any “Magnificent Seven” Stock, According to Wall Street was originally published by The Motley Fool