Competitively advantaged businesses set to benefit from the rapid growth of massive markets can be excellent investments. This is particularly true if you can buy them when their share prices are temporarily depressed.
These two elite growth stocks are on sale today, but they likely won't be for long.
Growth stock to buy No. 1: Palantir Technologies
The artificial intelligence (AI) revolution is advancing at lightning speed. Forward-thinking investors are starting to look beyond the suppliers of semiconductors and related infrastructure and turning their attention to innovative AI application providers. Palantir Technologies (PLTR +3.20%) stands among the elite in this rapidly expanding industry.
NASDAQ: PLTR
Key Data Points
Palantir helps its clients integrate cutting-edge data analytics and machine learning technology into their daily operations. These tools strengthen its customers' capacity to synthesize information from a wide array of sources and derive actionable insights, often in real time.
Palantir's offerings are in high demand among U.S. defense agencies. Palantir recently began delivering AI-powered intelligence-gathering systems to the U.S. Army. The Tactical Intelligence Targeting Access Node, or Titan, uses AI to collect sensor data and improve accuracy and decision-making.
Titan brings powerful computing and communication tools to front-line personnel. It also highlights the rising usage of advanced software on the battlefield -- and the U.S. military's increased focus on strengthening its digital capabilities. These trends should continue to fuel Palantir's growth in the coming years.
The commercial sector represents another vast opportunity for Palantir. Earlier this month, European financial giant Societe Generale deployed Palantir's anti-financial-crime solutions to bolster its data integrity, security, and fraud-prevention processes. Additionally, Palantir recently launched a joint venture with TWG Global. The companies will work together to bring enterprise-grade AI to smaller banks, insurance providers, and other financial institutions.
You can see more evidence of the soaring demand for Palantir's AI offerings in its financial reports. The software specialist's revenue climbed 29% to $2.9 billion in 2024. The gains were driven by a 30% jump in U.S. government sales and a 54% surge in U.S. commercial revenue.
Moreover, Palantir's profit margins are expanding as its sales base swells. The AI software star's operating income ballooned to $310 million, up from $120 million in 2023.
Palantir's stock is now trading at a roughly 30% discount to its 52-week high following the recent sell-off in the stock market. Some short-term traders are concerned that Defense Secretary Pete Hegseth's desire to reduce the defense budget could slow Palantir's expansion. However, with the Trump administration prioritizing efficiency, Palantir's cost-effective, software-based approach has it well positioned to take share from less AI-savvy competitors. That should enable Palantir to continue to grow its sales and profits, even if overall defense spending declines.
Thus, long-term-focused investors might want to take advantage of the recent downturn in Palantir's share price -- and invest in the AI innovator's stock today.
Growth stock to buy No. 2: Nvidia
Nvidia's (NVDA +2.82%) graphics processing units (GPUs) lie at the heart of the AI revolution. Yet while the AI colossus is enjoying red-hot demand for its powerful semiconductor chips, fearful traders have recently soured on its shares. That's presenting a compelling buying opportunity for patient, long-term investors.
NASDAQ: NVDA
Key Data Points
Tech juggernauts Microsoft, Alphabet, and Meta Platforms are ramping up their spending on AI-related infrastructure to power their fast-growing cloud computing operations. These three companies alone have announced plans to invest a stunning $220 billion in 2025. Much of this AI-driven spending is set to flow into Nvidia's coffers in the years ahead.
Nvidia's chips are considered best-in-class at training advanced AI models. Additionally, developers around the world have spent countless hours training on Nvidia's popular CUDA software, which enables them to program the tech giant's GPUs to execute a wide variety of tasks. The superiority of its chips and the time invested by developers into learning its software represent sizable switching costs for customers. In turn, these competitive advantages help to widen Nvidia's economic moat and protect its roughly 90% market share in AI data center GPUs.
Still, fears of intensifying competition weigh on Nvidia's stock price. It's not often that a single company can maintain a greater than 80% share of a lucrative and rapidly expanding market, as Nvidia has with its advanced AI processors. Would-be rivals Advanced Micro Devices and Intel have yet to make much of a dent in Nvidia's sales. For context, AMD's stock price has lost almost half its value over the past year, and Intel just hired a new CEO. With its competitors stumbling, Nvidia's dominance of the booming AI chip market appears secured.
Nevertheless, Nvidia's stock price is down about 20% from its 52-week highs. Its shares can currently be had for less than 27 times its projected earnings for its current fiscal year, which ends in January 2026. That's quite a bargain for a competitively dominant AI chipmaker that's expected to grow its profits by more than 47% during that period.
Buying elite businesses when they're on sale is a proven recipe for success in the stock market. You have a chance to make use of this wealth-building strategy by investing in Nvidia today.
