Many tech investors like to hunt for companies that could be the next hot stock -- ones that have the potential for quick and steep rallies that defy the broad market's expectations and perhaps even their own underlying fundamentals.
Some stocks that fall into this category might be heavily shorted, a condition that sets them up for short squeezes. (If you "short" a stock, you benefit when the price falls.) Others might be irrationally underpriced relative to their growth prospects. On the occasions when such beaten-down stocks rally, the initial surges can trigger secondary "fear of missing out" (FOMO) responses among other investors that drive their shares even higher.
Two tech stocks that went parabolic over the past few years are AI darlings Nvidia and Palantir Technologies. However, both of those red-hot stocks are unlikely to replicate those multibagger gains over the next few years, particularly considering their current scales.
Investing is a long-term endeavor, but if you're looking for the next potential parabolic tech play, you might want to start by considering unloved stocks that have obvious flaws and are heavily shorted. Assuming such companies are able to resolve their pressing issues, their short-sellers would need to cover their positions -- sometimes hastily. That situation of shorts having to sell can spark short-squeeze rallies and attract the attention of more growth-oriented investors.
Currently, three potential parabolic gainers worth looking at are SoundHound AI(NASDAQ: SOUN), Serve Robotics(NASDAQ: SERV), and Plug Power(NASDAQ: PLUG).
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SoundHound AI
SoundHound develops AI-powered audio and speech recognition tools. Its namesake app can be used to identify songs by it simply hearing a few seconds of audio or a few hummed bars, while its Houndify platform allows developers to create their own voice recognition applications.
The stock closed at its all-time high in December. But since then, it has declined by more than 50%, and as of April 30, 31% of its float was being shorted. Nevertheless, SoundHound is still growing rapidly by locking in more customers for its software across the automotive, restaurant, financial, healthcare, and tech sectors. It also expanded its restaurant-facing platform recently with two big acquisitions.
That said, SoundHound is still unprofitable, and it looks richly valued trading at 28 times this year's sales. Nvidia, which had owned a small slice of the company, liquidated its entire stake in it last year. Then management briefly delayed the company's 10-K filing in March. All of those issues are weighing down the stock.
However, the consensus view among analysts is still for SoundHound's revenue to grow at a compound annual rate of 54% over the next two years as more companies in more industries replace some of their customer service employees with AI-powered, voice-recognition-capable chatbots. Assuming the SoundHound follows that growth trajectory, it could shake off its short sellers and head a lot higher over the next decade.
Serve Robotics
Serve Robotics, a developer of autonomous delivery robots, was founded in 2017 within Postmates. Uber(NYSE: UBER) acquired Postmates in 2020, spun off Serve as an independent company in 2021, but continued using its delivery robots for Uber Eats in the Los Angeles area.
Serve Robotics' newest Gen 3 robots can travel at a max speed of 11 mph, last up to 48 miles on a single charge, and carry 15 gallons of cargo. They're also resistant to rain and extreme temperatures.
Serve has deployed 350 delivery robots to date. Only 73 of those robots were running active routes during the first quarter of 2025, but it aims to deploy 2,000 robots for Uber Eats by the end of the year.
Assuming it achieves that goal by expanding its core LA and Dallas/Fort Worth markets, analysts expect its revenue to grow from just $1.8 million in 2024 to $91.7 million in 2027. With a market cap of $600 million, Serve might not seem like a bargain at 6.5 times estimated 2027 sales. But if Uber expands its partnership to other cities -- and it attracts the attention of other delivery-driven companies -- it could grow much bigger. Serve's stock has dropped about 60% from its all-time high and 17% of its float was being shorted at the end of April, but this little robotics maker might just go parabolic in the future.
Plug Power
Plug Power develops hydrogen fuel cell, charging, storage, and transportation technologies. It has already deployed over 70,000 fuel cell systems and more than 250 fueling stations across the world, and it's the world's largest single buyer of liquid hydrogen.
Amazon and Walmart, which both use its hydrogen fuel cells to power their electric forklifts, are notably two of its biggest customers and investors (through stock warrants).
Plug's stock has plunged by 95% over the past three years (and is down by almost 99% from its 2021 peak), yet 25% of its float was still being shorted as of April 30. A lot of investors remain bearish on Plug because the market's demand for expensive new hydrogen projects remains chilly.
But from 2024 to 2027, analysts expect Plug's revenue to grow at a compound annual rate of 29%. This recovery could be driven by the stabilization of the hydrogen market, fresh contracts, and its $1.66 billion loan guarantee from the U.S. Department of Energy to build six green hydrogen manufacturing plants (which supports the Trump administration's long-term plans to boost domestic energy production). That's an impressive growth trajectory for a stock that trades at just 1.1 times this year's sales -- so any good news might just trigger a parabolic rally.
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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. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Nvidia, Palantir Technologies, Walmart, and Wolfspeed. The Motley Fool has a disclosure policy.
