Growth stocks helped major indexes soar last year, and two in particular stood out: Nvidia (NVDA -3.12%) posted the biggest gain in the Dow Jones Industrial Average and Palantir Technologies (PLTR) delivered the top performance in the S&P 500. These players surged 171% and 340%, respectively.
Why did investors pile into these players? Both have benefited from the artificial intelligence (AI) boom. Nvidia dominates the AI chip market, while Palantir uses AI as a key part of its software-as-a-service platform. As a result, revenue at both companies is soaring.
After these successes, you may think it’s too late to get in on these top AI players. But we’re actually in the early days of the AI growth story, and these companies are well positioned to benefit through the next chapters. Let’s take a closer look at these two red-hot growth stocks that remain buys in 2025.
Image source: Getty Images.
1. Nvidia
First, some background on this AI giant. Nvidia wasn’t always linked to AI, and instead, in its earlier days was known for its work with the video games industry. The company’s graphics processing units (GPUs) drove the lively images key to a great game (and they still do). But it soon became clear that GPUs could be useful in many other industries -- so Nvidia developed the CUDA parallel computing platform to make this a reality.
Today, Nvidia serves various industries -- from healthcare to automobile -- and its main focus is on AI. The data center business makes up the lion’s share of revenue, and it looks as if there’s a lot more growth to come. Here’s why. Nvidia will continue to benefit from the ongoing buildout of AI infrastructure, supplying GPUs and other products. For example, the U.S. just announced a new $500 billion AI infrastructure project and named Nvidia as a key technology partner.
On top of this, Nvidia is set to gain from the next wave of AI growth, the idea of applying AI to real world situations. Agentic AI, or the use of AI agents to consider problems, reason, and apply solutions, is a big part of that, and Nvidia has already taken steps here -- the company offers blueprints for customers to design their own AI agents.
So, today, trading for 49x forward earnings estimates, Nvidia looks reasonably priced -- and makes a great growth buy for 2025 and beyond.
2. Palantir Technologies
Twenty-year-old Palantir once was known for its contracts with governments, its biggest customer group. But, in recent times, a new growth driver has emerged, and that’s the commercial customer. Palantir sells software that aggregates a customer’s data and helps leverage that data to make often game-changing decisions.
The company launched a new product a little more than a year ago that’s helped this transition happen: the Artificial Intelligence Platform (AIP), which integrates AI into the data collection and decision-making process. Palantir’s commercial customers, totaling 14 just four years ago, have increased to about 300 -- concrete evidence that AIP is driving growth at Palantir.
In even more good news, government revenue continues to increase too, showing the company now has two strong growth drivers. In the recent quarter government and commercial revenue each climbed in the double digits. And Palantir reached its biggest profit ever.
AIP still is a relatively new product, and the number of commercial customers today leaves plenty of room for growth. On top of this, as mentioned, AI still is in its early stages of growth. Today’s $200 billion AI market may surpass $1 trillion by the end of the decade.
And though Palantir looks expensive in relation to forward earnings estimates -- its forward P/E ratio is 165 -- a metric that considers growth tells a different story. Palantir’s forward PEG ratio of 0.3 is reasonable, considering ratios of more than 1 suggest a stock is overvalued. All of this means Palantir remains a solid buy for growth investors in 2025.
