We recently published a list of 10 Best Growth Stocks Under $100 to Buy Now. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other best growth stocks under $100 to buy now.

Growth stocks are shares of companies which are expected to grow their revenue and earnings at a faster rate than the market average. These companies typically reinvest profits into expansion rather than paying dividends, aiming for long-term capital appreciation. Their high growth, however, tends to be priced at high valuations by the markets, making them significantly more expensive (in terms of P/E multiple, for example) than their more mature, value counterparts. As a result, the performance of growth stocks often depends on general market sentiment—during economic expansions, these stocks tend to outperform as their high growth expectations translate into reality, and their valuation multiple tends to expand; conversely, upon the slightest headwind or macroeconomic uncertainty, their growth and valuation multiple plummet.

READ ALSO: 12 Best Growth Stocks Under $25 to Buy Now

Growth stocks had a strong period of relative outperformance during 2021, as the zero-interest-rate environment, coupled with government stimulus, facilitated unprecedented growth in many industries, especially the consumer-related ones. This strong expansion fueled inflation, and as a result, growth stocks were hit hard by interest rates rising to more than 5% in the US – 2022 was a bad year for the US stock market and especially growth stocks. However, 2023 brought in a whole new growth story for the global markets – not only did the US economy adjust to the new regime of higher interest rates, but also the proliferation of AI megatrend created whole new giant markets and reinvestment opportunities across different sectors, ranging from software developers, semiconductor equipment manufacturers, automation players, and ending with water management, cooling and other infrastructure needed to support the future AI framework around the world.

The aforementioned developments led to a particularly strong 2023-2024 for the broad market and especially for growth stocks. Market valuations, as well as stock market concentration, reached close to record highs, as investors’ optimism in the “Roaring 2020s” scenario and the tremendous AI growth opportunities far outweighed potential recession fears and the negative impact of still elevated interest rates. The high valuation of the entire market, and particularly that of growth stocks, tends to coincide with the length of the horizon that the markets expect the economy to grow undisrupted with little to no risk. However, the new Trump 2.0 regime puts the previous growth scenario at risk—the “Roaring 2020s” scenario, which assumed significant economic acceleration due to onshoring, government stimulus, and huge productivity gains from AI, is now threatened by big cuts in federal financing of many large projects, as well as by the newly established tariffs potentially fueling a second wave of inflation, which will, in turn, require even higher interest rates in the economy.

The threats are confirmed by several forward-looking indicators and surveys, such as business conditions and CapEx outlook from the management of both large and small businesses, as well as by a new wave of layoffs going on in February. While the layoffs in the public sector were largely expected, February 2025 data also shows accelerating layoffs in the retail and technology sectors, which indirectly signals a weaker economy ahead. It is of no surprise that the broad US market sold off in the last few weeks, with many technology leaders down significantly from their 2024 peaks. We believe that attractive investment opportunities arise at times when fear and doubt take over the investors’ sentiment and lead to cheaper valuations for many growth stocks that would eventually recover as the challenges are navigated.

Our Methodology

We define growth stocks as those that have the potential to deliver future growth significantly above the average company in the universe. Consequently, we use Finviz to filter stocks that trade under $100 and have expected EPS compounded annual growth rate (CAGR) of at least 20% for the next 5 years. For all the companies, we also include the number of hedge funds having stakes in them, according to Insider Monkey’s Q4 2024 database. The stocks are ranked in ascending order of hedge funds having stakes in them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A software engineer manipulating a vast network of code on virtual monitors.

Palantir Technologies Inc. (NASDAQ:PLTR)

Number of Hedge Fund Holders: 64

Expected EPS CAGR in the next 5 years: 30.99%

Palantir Technologies Inc. (NASDAQ:PLTR) is a software company specializing in data integration, analytics, and artificial intelligence for government agencies and commercial enterprises. Its primary platforms, Palantir Gotham and Palantir Foundry, enable users to aggregate, analyze, and visualize large datasets for decision-making. Gotham is designed for defense, intelligence, and law enforcement, while Foundry serves industries such as finance, healthcare, and manufacturing. The company also offers Palantir Apollo, a continuous delivery system for software deployment. PLTR operates on a subscription-based model, with a focus on secure data processing, AI-driven insights, and partnerships across public and private sectors. The Colorado-based company ranked fourth on our recent list of 10 Hot AI Stocks to Buy Now.

Palantir Technologies Inc. (NASDAQ:PLTR) delivered exceptional results in the latest Q4 2024 with revenue growing 36% YoY and 14% sequentially to $828 million. The company’s US business demonstrated remarkable strength, growing 52% YoY in Q4, with US commercial revenue specifically growing 64% YoY and 20% sequentially. The company achieved a record-setting number of deals in Q4, including 32 deals worth $10 million or more, with total TCV of $1.8 billion across the business, representing a 56% increase YoY. PLTR’s AI Platform continues to drive new customer acquisition, with the company having nearly 5x the number of US commercial customers compared to three years ago. The company’s profitability metrics were equally impressive, achieving its strongest adjusted operating margin in history at 45% and a Rule of 40 score of 81 in the fourth quarter.

Looking forward, Palantir Technologies Inc. (NASDAQ:PLTR) is guiding to a full year 2025 revenue midpoint of $3.749 billion, representing a whopping 31% YoY growth rate. The company generated substantial cash flow with adjusted free cash flow of $517 million in Q4, representing a margin of 63%, and $1.25 billion for the full year, representing a margin of 44%. PLTR continues to ride the AI tailwind, and it is thus one of the best growth stocks to buy under $100.

Overall, PLTR ranks 6th on our list of best growth stocks under $100 to buy now. While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.