Giant tech stocks with $1trn+ market caps have become synonymous with the S&P 500. However, there are other firms in the index that look set for years of AI-fuelled business growth. Here are two.
Palantir
First up, we have Palantir Technologies (NASDAQ: PLTR), which was added to the S&P 500 in September. The stock rocketed 340% last year and is already up another 37% in 2025!
Palantir is a software company that helps customers aggregate their data to make better decisions. Historically, it has worked mainly with government organisations, including the CIA, US military, and the NHS.
However, it has more recently branched out to support enterprises. In Q4, US commercial revenue jumped 64% year on year!
A true game-changer came in 2023 when it launched Artificial Intelligence Platform (AIP). This isn’t just a chatbot — it’s a powerful decision-making AI system that helps organisations analyse, predict, and act on data.
For example, intelligence and defence agencies use it to detect threats and plan military operations. Banks use AIP to detect fraud, while it can help pharma firms speed up drug discovery.
Our business results continue to astound, demonstrating our deepening position at the centre of the AI revolution. Our early insights surrounding the commoditisation of large language models have evolved from theory to fact.
Palantir CEO Alex Karp, Q4 2024
While big growth is being delivered at both ends of the income statement, the valuation more than reflects this. Right now, the price-to-sales (P/S) ratio is 71. I can’t justify investing at this price. It basically leaves zero room for error (demand for AI solutions could cool off in 2026, for example).
That said, I’d like to add Palantir to my portfolio, once the valuation is more palatable.
| Market cap | $236bn |
| Forecast revenue for 2025 | $3.8bn (32% growth) |
| Forward price-to-earnings (P/E) ratio | 172 |
Axon
Another stock that looks set for many years of AI-powered growth is Axon Enterprise (NASDAQ: AXON). The company is famous for inventing the Taser stun gun (which is actually a brand that Axon owns). Nowadays though, it also makes money from body cameras, dash cameras, drones, VR-based training, and software services.
Axon has demolished Wall Street’s earnings estimates by more than 20% for four straight quarters! No wonder the stock is up 157% in a year.
All the recorded footage gathered from body and dash cams, drones, police interviews, and other sources gets stored in its cloud-based platform (Evidence.com). From this massive data set, the company is conjuring up some powerful AI solutions for its law enforcement customers.
Indeed, it has so many ideas that it has launched a subscription service that bundles in all existing and future AI products.
We are positioning ourselves as the indisputable leader in delivering the power of AI in practical, usable applications.
Axon CEO Rick Smith.
One potentially game-changing new AI product is Draft One. This transcribes body camera audio into draft police reports, reducing an officer’s time spent writing reports by as much as 70%.
| Market cap | $50bn |
| Forecast revenue for 2025 | $2.6bn (23% growth) |
| Forward P/E ratio | 105 |
The stock isn’t as pricey as Palantir, but it’s certainly not cheap. The P/S multiple is around 26. Consequently, a deceleration in growth is a risk, while Draft One might not live up to the early hype.
Still, I’m very bullish here. Axon is my top holding, yet I wouldn’t think twice about adding to it if the stock dropped 20%-30% during a market meltdown.
