After a strong run for the stock market the past two years, volatility has returned in 2025. But there are pockets of opportunity among top growth stocks. While the S&P 500(SNPINDEX: ^GSPC) is down 8% at the time of writing, some companies that entered the year with strong momentum are holding up quite well.
Shares of Palantir Technologies(NASDAQ: PLTR) and Uber Technologies(NYSE: UBER) are two of the best performing stocks in the S&P 500 this year. Let's look at what is driving their share prices higher, and whether these top performers are still good investments.
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1. Palantir Technologies
Leading businesses and governments are modernizing with artificial intelligence (AI). Palantir Technologies is one of the top providers of AI-powered data analytics software. The stock has had a phenomenal run, rising 1,500% since 2022. It has continued to perform well in 2025, up 33% as of April 23. But investors have to wonder if the stock has gotten too far ahead of the company's actual performance.
Palantir delivered accelerating revenue growth over the past year. In the fourth quarter, U.S. commercial revenue grew 64% year-over-year. Companies are choosing Palantir to improve efficiency and speed up decision making. For example, a leading telecommunications company recently signed a $40 million deal with Palantir, which will free up capital from using older technology and equipment.
Palantir also is playing a vital role in strengthening the U.S. military with cutting-edge technology. Its U.S. government revenue grew 45% year-over-year in Q4. Palantir developed its Tactical Intelligence Targeting Access Node (TITAN) for the U.S. Army that uses AI to improve strike targeting and accuracy on the battlefield.
These use cases indicate the level of sophistication of Palantir's AI capabilities, and that's why leading companies continue to sign multimillion-dollar deals. It's also benefiting the stock that the company is converting these growing revenues into a healthy profit. The company made $462 million in net profit on $2.9 billion of revenue last year.
The only negative with Palantir stock is the valuation. The shares trade at an astronomical 548 times earnings at the time of writing. At these lofty share prices, the stock could be overshooting the company's worth. While it's impossible to predict the timing, investors have to assume that this nosebleed valuation could lead to a downward correction in the share price. It might be best to wait for the stock to settle at a lower earnings multiple before starting an investment.
2. Uber Technologies
Investors shouldn't overlook the momentum happening in the global ride-hailing market. Uber Technologies has made substantial investments in its technology and service, and it is translating to strong growth. The stock climbed 200% since 2022 and 22% year to date through April 23, but its valuation could leave room for more gains over the next year and beyond.
Uber's growth suggests it is going after a huge opportunity in the transportation market. It offers multiple services tailored for healthcare, freight, and enterprise. It's also expanding into membership that offers special discounts on Uber Eats and rides and has already reached 30 million subscribers so far, up 60% year-over-year in the fourth quarter.
It's also investing in the future. The company has partnered with Google's Waymo self-driving car unit, in addition to China's WeRide. Its autonomous ride service recently launched in Austin, Texas, and is soon launching in Atlanta, Georgia. Overall, Uber currently has multiple partners working on autonomous ride and delivery services.
Uber benefits from a capital-light business model, where drivers maintain their own vehicles, which leaves a lucrative revenue stream coming from fees on every ride and delivery. Last year, Uber's operating profit more than doubled to $2.8 billion, and there seems to be more room for growth as the company improves margins.
Analysts expect Uber's earnings to grow at an annualized rate of 30% in the coming years, yet investors can buy shares for just 23 times 2025 earnings estimates. That's a fair multiple for an average growth stock, so investors should expect Uber shares to deliver satisfactory returns over the long term.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Palantir Technologies, and Uber Technologies. The Motley Fool has a disclosure policy.
