Two Top Growth Stocks to Consider Buying in 2025

Growth stocks played a significant role in boosting major stock market indexes last year, with two particular names emerging as front-runners. Nvidia (NVDA) saw the highest gains in the Dow Jones Industrial Average, achieving a remarkable 171% increase. Meanwhile, Palantir Technologies (PLTR) led the S&P 500 with an astonishing 340% rise.

The surge in these stocks can be attributed to the ongoing artificial intelligence (AI) revolution. Nvidia is a leader in the AI chip market, while Palantir incorporates AI into its software-as-a-service offerings, resulting in significant revenue growth for both companies.

Despite their impressive past performances, it is important to note that we are still in the early stages of the AI growth narrative. Therefore, these companies remain poised to benefit further in the coming years. Let’s delve deeper into these two high-growth stocks that are worth considering for 2025.

Nvidia: A Leader in AI Technology

Nvidia has evolved significantly since its inception, originally gaining fame in the video game industry with its graphics processing units (GPUs), which are crucial for creating stunning graphics in games. However, it became clear that GPUs had applications in various sectors beyond gaming. This realization led Nvidia to develop the CUDA parallel computing platform, broadening its potential.

Today, Nvidia serves numerous sectors including healthcare and automotive, with a primary focus on AI technology. The data center segment contributes the majority of the company's revenue, and substantial growth prospects still lie ahead. A landmark development is the recent announcement of a $500 billion AI infrastructure initiative from the U.S. government, which has designated Nvidia as a key technology partner.

Moreover, Nvidia is preparing for the next phase of AI evolution — applying AI to real-world issues. The concept of Agentic AI involves using AI agents to analyze problems, reason, and implement solutions, and Nvidia is taking proactive steps in this area by providing frameworks for clients to build their own AI agents.

Currently trading at 49 times its forward earnings, Nvidia appears fairly valued and could be a solid growth investment for 2025 and beyond.

Palantir Technologies: Expanding into Commercial Markets

Founded two decades ago, Palantir initially gained recognition through its contracts with government entities, which remain one of its major customer segments. However, in recent times, the company has found a new catalyst for growth: the commercial sector. Palantir offers software that consolidates data for clients, facilitating impactful decision-making.

More than a year ago, Palantir released its Artificial Intelligence Platform (AIP), which has played a pivotal role in this transition to commercial clients. This platform integrates AI into data collection and decision-making processes. In just four years, the number of Palantir's commercial clients has surged from 14 to approximately 300, underscoring the success of AIP in driving revenue growth.

Additionally, revenue from government contracts has continued to rise, providing Palantir with two robust growth avenues. Recently, revenue from both government and commercial sectors showcased double-digit growth, leading to Palantir's highest profit ever.

As AIP is still relatively new and with plenty of room for expansion in the commercial sector, along with the AI market projected to grow from $200 billion to over $1 trillion by the decade's end, Palantir seems well-positioned for future success.

Although Palantir's forward price-to-earnings (P/E) ratio appears high at 165, a deeper analysis using the price/earnings-to-growth (PEG) ratio reveals a more attractive picture. With a PEG ratio of 0.3, which suggests it is reasonably valued, Palantir remains a solid prospect for growth-oriented investors looking at the future.

In conclusion, both Nvidia and Palantir are pivotal players in the burgeoning AI landscape, and their growth trajectories position them as prime candidates for consideration by investors in 2025.

Growth, Stocks, AI