High-Momentum Growth Stocks in the Buy Zone: Why Palantir and AppLovin Are Key Buys as 2025 Winds Down

As 2025 enters its final stretch, the market is recalibrating after a year of explosive growth in AI-driven tech stocks. While volatility has returned to the sector, two names-Palantir Technologies (PLTR) and AppLovin (APP)-stand out as compelling buys. Both companies have demonstrated exceptional technical and fundamental momentum, underpinned by transformative contracts, robust financial performance, and favorable macroeconomic tailwinds. For investors seeking exposure to high-growth opportunities in a stabilizing market, these stocks offer a rare combination of catalysts and technical strength.

Palantir: A $10 Billion Catalyst and a Reinvented Business Model

Palantir's July 2025 announcement of a $10 billion, 10-year Enterprise Agreement (EA) with the U.S. Army marked a pivotal moment for the company. This contract consolidates 75 existing agreements into a single framework, eliminating pass-through fees and enabling volume-based discounts according to research. The deal not only secures a decade of recurring revenue but also positions Palantir as a critical infrastructure provider for the U.S. military's AI and data analytics needs.

Fundamentally, the contract has already driven significant growth. Palantir's Q3 2025 revenue surged to $1.181 billion, a 63% year-over-year increase, with the government segment contributing $486 million (+52% YoY). The company raised its full-year 2025 revenue guidance to $4.4 billion, reflecting accelerating demand for its AI-powered platforms. Notably, Palantir's U.S. commercial revenue grew by 121% YoY, signaling a successful pivot from a government-centric model to a broader enterprise focus.

Technically, PLTR has shown resilience despite mixed short-term reactions. While the stock dipped 2% in premarket trading following the contract announcement, it has since surged 147% year-to-date, forming a bullish breakout pattern. Key indicators include an RSI of 61.24 (suggesting a buy signal), a 50-day moving average above the 200-day line, and a MACD in positive territory according to technical analysis. However, overbought conditions and a forward price-to-sales ratio of 119 raise valuation concerns. For now, the stock remains in a long-term uptrend, with institutional and retail investors showing strong conviction according to market analysis.

AppLovin: AI-Driven Ad Tech and a High-Conviction Bull Case

AppLovin's story in 2025 has been one of explosive growth and strategic reinvention. The company's AI-powered ad platform, Axon 2.0, has driven a 77% year-over-year revenue increase to $1.26 billion in the latest quarter. This growth has been fueled by expanding into e-commerce and web advertising, where AppLovin's potential market is significantly larger than its mobile gaming roots.

Financially, AppLovin has outperformed expectations. In Q3 2025, the company generated $1.05 billion in free cash flow and repurchased $571 million in shares, demonstrating strong capital discipline. However, its valuation remains a point of contention. A DCF model estimates its intrinsic value at $530.17 per share, 20% below its current price, while its PE ratio of 85.77x far exceeds the industry average of 34.72x. Despite these concerns, AppLovin's customer acquisition efficiency-measured by a CAC payback period of just 0.3 months-highlights its operational strength.

Technically, APP has formed a confirmed bull flag and a breakout above a descending channel, with RSI and MACD indicators in bullish territory. The stock is trading above key moving averages, including the 50-day EMA and ICHIMOKU CLOUD, reinforcing its uptrend. While short-term volatility persists (a 9.5% dip in the last month), the long-term trend remains intact, with analysts projecting a potential $750–$860 price range.

Macro Tailwinds: AI and Rate Cuts Fuel Growth

Both Palantir and AppLovin benefit from two of the most powerful macroeconomic trends in 2025: AI adoption and the anticipation of Federal Reserve rate cuts. AI investment is expected to contribute nearly half of 2026's GDP growth, with business spending on AI-driven tools remaining robust. For companies like Palantir and AppLovin, which are at the forefront of AI integration, this creates a durable growth tailwind.

Simultaneously, the Fed's pivot toward a "soft landing" strategy has increased the odds of rate cuts in late 2025 and early 2026. Lower borrowing costs reduce the discount rate for high-growth stocks, making companies with strong cash flow and scalable models more attractive. While investors have grown cautious about overvalued AI stocks, the combination of tangible monetization (e.g., Palantir's $1B+ revenue) and macroeconomic support suggests that the sector's best performers can sustain their momentum.

The Buy Case: Momentum, Catalysts, and Risk Mitigation

For Palantir, the $10 billion Army contract is a structural catalyst that ensures long-term revenue visibility. The company's ability to deliver both top-line and bottom-line growth-despite a high valuation-demonstrates its unique positioning in the AI and defense sectors. Technically, PLTR remains in a strong uptrend, with key support levels at $119.91 and resistance at $207.18.

AppLovin, meanwhile, offers a high-conviction trade for investors willing to tolerate short-term volatility. Its breakout pattern and bullish technical indicators suggest further upside, particularly if the Fed follows through on rate cuts. While valuation risks are present, the company's operational efficiency and expanding addressable market justify its premium pricing.

Conclusion: Positioning for 2026

As 2025 winds down, Palantir and AppLovin represent two of the most compelling growth stories in the AI and tech sectors. Both stocks have demonstrated exceptional momentum, driven by transformative contracts, strong fundamentals, and favorable macroeconomic conditions. While risks such as valuation overhangs and market corrections exist, the combination of technical strength and durable growth catalysts makes these names ideal for investors seeking exposure to high-momentum opportunities in a stabilizing market.