2 Red-Hot Growth Stocks to Buy in 2025

The world of technology is ripe with supercharged growth stocks right now as the artificial intelligence (AI) boom marches on. Companies that make AI tools as well as players that offer AI-based services have seen revenue and stock performance soar. The good news is it's not too late to get in on some of these movers and shakers as some players still are in the early stages of their growth stories.

It's important to note that though AI stocks have helped the S&P 500 jump to record levels, these companies may have much more to gain in the years to come. Today, the AI market is valued in the billions of dollars, but analysts expect it to reach into the trillions in a few years. So now looks like a fantastic time to get in on AI stocks, especially those that involve the use of this game-changing technology in the real world.

With this in mind, let's check out the following two red-hot growth stocks that I think are buys in 2025.

1. Palantir Technologies

Palantir Technologies (NASDAQ: PLTR) has seen its stock price climb more than 2,000% over the past three years as customers rushed to get in on its latest platform -- one driven by AI. The company makes software systems to help its customers solve problems and grow by harnessing the power of their data, and just two years ago it launched its Artificial Intelligence Platform (AIP), bringing AI into the process.

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AIP has attracted government and commercial customers, with growth in each of these businesses advancing in the double digits quarter after quarter. Only a few years ago, Palantir relied on government contracts for revenue and had just a handful of commercial customers, so the introduction of AIP has been transformational for the company's revenue prospects. Through Palantir's platform, customers can easily and immediately apply AI to their work and obtain big results.

Palantir also reached profitability in recent years, and it's achieved a solid balance between growth and profit as seen in its Rule of 40 score. A score of 40% or higher is considered good, so Palantir, at 94% in the recent quarter, truly is winning here.

Though Palantir shares are expensive by classic valuation measures -- trading at 283 times forward earnings estimates, for example -- these aren't always the best ways to evaluate a high-growth tech company. They don't reflect potential revenue levels several years down the road. While value investors probably won't find Palantir appealing, this red-hot stock still is a great buy for aggressive investors who aim to hold on for the long term.

2. SoundHound AI

Shares of SoundHound AI (NASDAQ: SOUN) have advanced more than 400% over the past three years as the company has demonstrated excellent real-world uses for AI. This player is a specialist in voice AI, and you might interact with its products at a restaurant, while making a medical appointment, or even while driving your car. The company sells its voice AI systems across industries to do various jobs, and this has resulted in explosive revenue growth.

In the latest quarter, SoundHound reported a 217% increase in revenue to more than $42 million -- that's a record level -- and increased its full-year revenue guidance to the range of $160 million to $178 million. That's up from its earlier forecast of $157 million to $177 million. This shows enormous growth is expected, but the levels of revenue suggest that there's still room to run over the long term, especially considering the total addressable market for SoundHound's product totals $140 billion.

This market size includes a wide range of industries, from financial services to retail and healthcare, and that's just to name a few. SoundHound is already present in several of these and continues to add new contracts and customers from quarter to quarter. In its latest report to shareholders, the company said it had a "breakthrough quarter with numerous wins" in the restaurant industry. For example, it signed new deals with Red Lobster and Applebee's.

SoundHound stands out from rivals as it has developed a technology that helps machines understand speech in real time. As customers across industries turn to SoundHound to apply AI to their businesses, now is a great moment to get in on this red-hot story.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.