Artificial intelligence (AI) software stocks have split into two camps this year: companies proving AI actually shows up in their revenue, and companies still asking investors to take their word for it. Palantir Technologies (PLTR +2.40%) and four peers, CrowdStrike (CRWD -0.92%), SoundHound AI (SOUN -1.95%), AppLovin (APP -0.42%), and ServiceNow (NOW +1.36%), each tell a different version of that story.
Here's how I'd think about each one five years out.
Image source: Getty Images.
Palantir is the most expensive stock on this list for a reason
Palantir trades around $192 a share, at roughly 75 times trailing sales, a valuation that assumes years of flawless execution. Revenue grew 93% last quarter, with U.S. commercial revenue up 149%, evidence that its AI platform, AIP, is converting into actual contracts, not just pilot programs.
Bull case: Growth holds up, and the stock grows into today's multiple.
Base case: Growth normalizes into the 40% to 60% range, and the stock still compounds, just more slowly.
Bear case: Any real deceleration, paired with a multiple this extreme, sends the stock down hard before it ever grows into today's price.
NASDAQ: PLTR
Key Data Points
CrowdStrike
CrowdStrike trades at about 51 times sales, also a steep multiple, but one backed by $5.25 billion in annual recurring revenue (ARR) growing 24% and accelerating. Falcon Flex, its AI-driven bundling platform, hit $2.29 billion in ARR, up 101% year over year, and adoption of its AI detection tool roughly quintupled in a single quarter after an acquisition integration.
Bull case: Cybersecurity spending keeps growing, and CrowdStrike keeps taking share. Also, as concerns grow about AI agents acting unpredictably, investors are looking to CrowdStrike for guidance on securing these new AI systems.
Base case: Growth cools from elite to merely very good, and the stock still works.
Bear case: The valuation simply has no room for a stumble.
NASDAQ: CRWD
Key Data Points
SoundHound AI
SoundHound trades at around 12 times sales after a rough 2026, and the stock is down roughly 41% even as revenue hit a record $61.9 million last quarter, up 45%. It's proof of real AI voice tech already being adopted by restaurants, automakers, and call centers.
Bull case: The company turns profitable while keeping growth above 40%.
Base case: Growth slows, and the stock starts trading more like a typical software company.
Bear case: Continued cash burn without enough proof that the unit economics work.
AppLovin
AppLovin trades at around 20 times forward earnings, cheap next to the others here, despite revenue growing 59% last quarter, per Barrons. The evidence AI is working: its Axon ad-targeting engine grew 700% in a single quarter as advertisers shifted budget toward its AI-optimized placements, according to Tikr reporting.
Bull case: Axon moves beyond gaming into e-commerce and keeps growing at this pace.
Base case: Growth slows to the 30% to 40% range as comparisons get tougher, still a strong result.
Bear case: A platform this reliant on advertiser budgets is first in line when ad spending pulls back.
NASDAQ: APP
Key Data Points
ServiceNow
ServiceNow has lagged this group in 2026, and I get why: its AI annual contract value, while it just crossed $1 billion, according to Reuters, but that is still a small slice of a company doing tens of billions in total revenue. The stock trades around 29 times forward earnings, cheap by this group's standards, following a 5-for-1 split in December 2025 that made shares easier to buy. The reason it still belongs here: ServiceNow isn't selling AI as a bolt-on, it's embedding agentic AI into workflows enterprises already run their operations on, and production AI deployments are up ninefold in nine months.
Bull case: That embedded position turns into real pricing power within two to three years.
Base case: AI revenue remains a modest contributor, while the core platform continues to grow steadily.
Bear case: AI software budgets consolidate toward more specialized tools, and ServiceNow's AI layer never becomes the headline growth driver investors hope for.
My logic for these cases is this: ServiceNow's AI revenue is still tiny relative to its total business, so the real question over five years is whether that AI layer becomes a genuine growth driver or just rides along with the core platform without changing the trajectory much.
