Got $5,000? 2 Growth Stocks Building the Software Backbone of the AI Revolution
Key Points
Amazon’s AWS is becoming a foundational layer of the AI software market.
Palantir’s data aggregation services support the development of new AI applications.
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The artificial intelligence (AI) market is expanding rapidly as more companies use its applications to accelerate, automate, and optimize their operations. According to Grand View Research, the AI market could still expand at a 30.6% CAGR from 2026 to 2033 -- so it isn't too late to jump aboard the bandwagon and buy the top AI stocks.
However, many growth-oriented investors tend to focus on AI chipmakers -- most notably Nvidia -- rather than the companies building the software that supports the market's breakneck expansion. So today, let's focus on two high-growth AI software plays -- Amazon (NASDAQ: AMZN) and Palantir (NASDAQ: PLTR) -- that could easily turn a $5,000 investment into much more over the next few years as the AI market expands.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
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The balanced choice: Amazon
Amazon, the world's largest e-commerce and cloud infrastructure company, is a linchpin of the AI market. Amazon Web Services (AWS), its market-leading cloud infrastructure platform, hosts Bedrock (a managed service that enabled over 100,000 organizations to develop their own generative AI applications), SageMaker (a platform for training custom AI models), and specialized APIs for specific AI tasks. Amazon even produces its own first-party AI chips.
Amazon owns roughly a fifth of Anthropic, one of the world's fastest-growing AI companies. Under the terms of that deal, Anthropic must use AWS as its primary cloud infrastructure provider and purchase Amazon's custom Trainium AI chips. Anthropic's upcoming IPO, which could be the largest in history, should also boost Amazon's net income.
Amazon still generates most of its revenue from its retail business, but most of its operating profits come from AWS. The AI market's secular expansion should generate robust tailwinds for AWS as more developers and businesses hop aboard the generative AI bandwagon. The growth of that core profit engine -- along with the expansion of Amazon's smaller, high-margin advertising business -- should subsidize the growth of its lower-margin retail business.
From 2025 to 2028, analysts expect Amazon's revenue and EPS to grow at CAGRs of 15% and 24%, respectively. Its stock looks reasonably valued at 25 times next year's earnings, and it will profit from the long-term growth of the AI, cloud, digital advertising, and e-commerce markets.
The aggressive choice: Palantir
Palantir, which went public six years ago, declared in its S-1 filing that it would become the "default operating system for data across the U.S. government." That seems like a bold claim, but most U.S. government agencies already use Palantir's Gotham platform to aggregate their data. Many large companies -- including Amazon, Walmart, and Apple -- also use Palantir's Foundry platform for commercial customers.
With Gotham and Foundry, Palantir creates a "digital twin" of a client's organization (through databases, supply chains, sensors, emails, documents, social media accounts, financial records, and other data) across a wide range of computing platforms. It then uses its Ontology data model to unify that data into an easy-to-query stream of information for non-technical users.
That silo-busting strategy saves its clients a lot of time and money, making it easier to make faster, data-driven decisions and build new AI applications. Palantir's Artificial Intelligence Platform (AIP), launched in 2023, connects large language models (such as OpenAI's ChatGPT and Anthropic's Claude) directly to its aggregated data. Therefore, Palantir isn't simply helping build the software backbone of the AI revolution -- it's also creating the connective tissue.
From 2025 to 2028, analysts expect Palantir's revenue and EPS to grow at CAGRs of 58% and 70%, respectively. It expects its U.S. commercial business to continue growing faster than its government business, but also expects the military conflicts in the Middle East and Ukraine to drive the U.S. military to ramp up its use of Gotham for mission planning and testing. Palantir's stock isn't cheap at 87 times next year's earnings, but it could deserve that premium valuation.
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*Stock Advisor returns as of September 22, 2026.
Leo Sun has positions in Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, Nvidia, Palantir Technologies, and Walmart. The Motley Fool has a disclosure policy.
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