3 AI Software Stocks Set to Thrive in 2025

Clyde MorganFriday, Feb 14, 2025 1:19 pm ET
5min read


As the demand for artificial intelligence (AI) continues to grow, so does the potential for AI software stocks to thrive. In 2025, three companies stand out as strong contenders in the AI software sector: Palantir Technologies (PLTR), Microsoft (MSFT), and AppLovin (APP). Each of these companies offers unique AI software solutions and has demonstrated strong financial performances, setting them up for future growth.

Palantir Technologies (PLTR) is a leading AI software company that focuses on the applications and workflow layers of AI. Their platform helps customers use AI to solve real-world problems by mapping data sets and models to their real-world counterparts. Palantir differentiates itself from competitors by offering AI workshops, called boot camps, to show how their AI platform can address potential use cases and help with training. With a strong presence in the U.S. government sector, which is their largest customer, Palantir is well-positioned to capitalize on the growing demand for AI software.

Microsoft (MSFT) offers AI solutions through its cloud computing unit Azure and its software business, including Microsoft 365 Copilots. Their AI solutions include Azure AI, which helps customers create their own AI models and Copilots, GitHub AI Copilot, which suggests and helps programmers finish coding, and Microsoft 365 Copilots, which offer AI assistants for various tasks such as prioritizing emails, summarizing meeting notes, and creating PowerPoint presentations using natural language. Microsoft differentiates itself from competitors by having a strong presence in the enterprise software market and offering a wide range of AI solutions tailored to different business needs. With 70% of the Fortune 500 using Copilots, Microsoft has a large user base for its AI technology.

AppLovin (APP) offers an AI-powered adtech solution called Axon-2, which helps gaming app companies attract and better monetize users. Their platform uses predictive machine learning to target gamers effectively. AppLovin differentiates itself from competitors by focusing on the gaming industry for its AI adtech solution and offering a self-learning platform that improves its targeting capabilities over time. With plans to expand its customer base beyond gaming, AppLovin is well-positioned to capitalize on the growing demand for AI software in the e-commerce sector.

The financial performances of these companies have been positively impacted by the growing demand for AI software. Palantir Technologies (PLTR) significantly outperformed earnings estimates in its latest report, with earnings up 27%. The stock is up 55.90% in 2025, making it the S&P 500's highest-performing stock year-to-date. Salesforce (CRM) has lost 1.34% in share asset value year-to-date, but analysts remain bullish on the company. Wedbush, Mizuho, and Truist have all given CRM outperform calls with price targets ranging from $400 to $425. C3.ai (AI) has established itself as a rising power in the defense industry and is expected to continue benefiting from AI software demand.



As these companies continue to grow and innovate in the AI software sector, they face several risks and challenges. High stock price volatility and a high P/S multiple (41x 2025 analyst estimates) leave Palantir's stock vulnerable to market fluctuations and potential disappointments in earnings or growth. Competition in the AI space is fierce, with companies like Google, Amazon, and Apple also investing heavily in AI technologies. Dependence on a single product (Axon-2) for growth exposes AppLovin to potential market shifts or technological obsolescence.

To mitigate these risks, Palantir focuses on the applications and workflow layers of AI, rather than just AI models, and offers AI workshops to help customers understand the real-world potential of AI. Microsoft's early embrace of AI and its partnership with OpenAI have given it a head start in the AI race. AppLovin is expanding its customer base beyond gaming, with e-commerce being the next target. By focusing on unique aspects of AI, investing in partnerships and strategic initiatives, and expanding their customer bases, these companies are mitigating the risks they face in the AI software sector.



In conclusion, Palantir Technologies (PLTR), Microsoft (MSFT), and AppLovin (APP) are three AI software stocks set to thrive in 2025. With unique AI software solutions, strong financial performances, and innovative strategies to mitigate risks, these companies are well-positioned to capitalize on the growing demand for AI software. As the AI software market continues to grow, investors should consider these companies as strong contenders in the sector. However, it is essential to stay informed about the risks and challenges these companies face and make investment decisions based on thorough research and analysis.