Investing in safe, slow compounding stocks is a great investment strategy. However, having some swing-for-the-fences type stocks in your portfolio isn't a bad idea. After all, high-risk, high-upside names can turn a small stake into something much more meaningful.
Let's look at five tech stocks that I think have that kind of explosive potential if things break right.
Palantir Technologies
NASDAQ: PLTR
Key Data Points
Palantir Technologies (PLTR 1.86%) took a different approach to artificial intelligence (AI) than most companies, which is why the stock still remains compelling after a big run-up and high valuation. The company's roots are in data gathering and analytics, but it's now using that foundation to make AI more actionable.
The company's AI platform (AIP) gathers data into an ontology where it then connects the data to real assets and processes, allowing its platform to act as an orchestration layer for AI. In essence, it's become an AI operating system. This approach has been increasingly resonating with customers in the U.S commercial sector.
As a result, revenue is accelerating. Last quarter, its U.S. commercial revenue jumped 71%, while overall revenue climbed 39%. But what stands out is the company's 127% increase in commercial deal value. These are signed contracts that haven't even hit the revenue line yet. The government side is humming along, too. The company has continued to announce new deals with the Department of Defense, and Palantir just inked a new deal with NATO.
Given the breadth of use cases for Palantir's technology, the company has the opportunity to grow into one of the largest AI companies in the world.
IonQ
Quantum computing is still a highly speculative field, but IonQ (IONQ +2.49%) staked out an early lead. This isn't all about futuristic theory; the company is building real systems with low error rates and a clear roadmap to fault tolerance. That's the holy grail in quantum computing, as without fault tolerance, quantum computing can't move beyond the lab. With it, however, you can start talking about things like rapid drug development and unbreakable encryption.
IonQ is working with companies like Nvidia and AstraZeneca on real applications, and it just opened a 65,000 square-foot facility in Washington State to manufacture quantum computers at scale. The company also has nearly $700 million in cash and investments and no debt, which gives it plenty of room to keep investing in quantum computing technology. It's also been smart about acquisitions, buying smaller players to strengthen its tech.
NYSE: IONQ
Key Data Points
The company is clearly in the early stages, but if quantum computing becomes the next big computing shift -- and Nvidia CEO Jensen Huang recently said we're at an "inflection point" -- IonQ could be one of the biggest winners in tech.
Image source: Getty Images.
SoundHound AI
A leader in AI voice technology, SoundHound AI (SOUN 1.83%) is moving in a bold new direction, looking to build voice-first AI agents that understand, reason, and act.
Its AI voice technology already powers voice assistants in vehicles and drive-thru ordering systems at restaurants, but its acquisition of Amelia helped expand the company's vision. The deal gave it advanced conversational intelligence and enterprise customers in fields such as healthcare and finance. It's now taken that technology and combined it with its own "speech-to-meaning" and "deep meaning understanding" technology to create Amelia 7.0, an AI voice-agent platform that not only can communicate like a human but handle complex requests and complete tasks without human intervention.
If SoundHound can become the go-to provider for AI-powered voice and AI agents, the addressable market is massive. There are a lot of players trying to build AI agents right now, but SoundHound has something unique with its voice-first approach. It's early, but the potential reward here is big if it can deliver.
AppLovin
AppLovin (APP +3.23%) has gone from a forgotten tech name to one of the most profitable growth companies in the market due to its Axon 2 AI ad engine. Axon 2 has not only helped the company grow its revenue but also boost its gross margins. In Q1, its advertising revenue soared over 70%, while its advertising segment gross margins hit 81%, up from 73% a year ago.
Most of the growth is coming from gaming apps, where AppLovin uses AI to predict which ads will perform best and who's most likely to download them. But now it's moving beyond gaming. It's testing Axon 2 in e-commerce and seeing early success. If that expansion takes hold, this could become a much bigger business.
NASDAQ: APP
Key Data Points
There's been some noise from short sellers, and the company's alleged ties to China have drawn scrutiny. But the numbers don't lie -- this is a profitable, fast-growing business. If the company can successfully expand beyond gaming, the stock could have huge upside from here.
GitLab
There's a narrative floating around that AI will hurt GitLab (GTLB 1.37%) because AI will soon write all the code, and coders won't be needed. However, AI is leading to software development speeding up, not slowing down, and GitLab is positioning itself as the go-to end-to-end platform for AI-driven development.
Its GitLab 18 release included over 30 new features, most notably its Duo Agent platform, which allows AI agents to help across the entire software development lifecycle. Developers only spend about 20% of their time writing code, and GitLab is now helping automate everything.
Also, don't be surprised if the company can change its pricing model from being seat-based to consumption-based. GitLab is now adding a lot more value, which not only deserves higher prices but which can be priced more on outcomes than the number of people using its platform. Its platform can also help open the door to new markets beyond developers, as other workers who don't know how to write code can now create powerful apps.
If this shift plays out the way I imagine, then the stock could have tremendous upside from here.
