10 fast-growing software stocks to watch in 2025, including the runaway Palantir

Rockstar is the developer of the “Grand Theft Auto” franchise. To the right on the table you can see that analysts expect to see a lofty increase in earnings per share for Take-Two next year following the anticipated release of “Grand Theft Auto VI.” But Rockstar hasn’t said much about the timing of the much-anticipated game since putting out a trailer last December.

In a note to clients in October, MoffettNathanson analyst Clay Griffin wrote that he was impressed with the trailer, but added that it was “hard to see how estimates for GTA go meaningfully higher from here.” He suggested that investors look upon any announcement of a further delay for the “Grand Theft Auto IV” release as a buying opportunity for Take-Two’s stock. For now, he has a neutral rating on Take-Two.

Analysts are also upbeat about the sales-growth potential of cybersecurity companies heading into next year, with CrowdStrike Holdings Inc. CRWD and Palo Alto Networks Inc. PANW both ranking within the top 10 by expected growth.

Both of those cybersecurity stocks have pointed narratives. CrowdStrike made headlines for the wrong reasons this summer when a bad software upgrade triggered a massive technology outage. But with analysts predicting nearly 22% sales growth next calendar year, the company’s business should continue to hum along. “Concerns about a significant acceleration in customer churn were firmly disproven” in the latest quarter, Evercore ISI analyst Peter Levine wrote recently.

Meanwhile, Palo Alto Networks has bet on succeeding with its “platformization” strategy, through which the company is giving away some product to customers for free in order to spur greater paid adoption of its broader suite down the road.

“We continue to see [Palo Alto Networks’] platform strategy taking root” and driving a pickup in market share, Jefferies analyst Joseph Gallo wrote Thursday.

For Palantir, the next table illustrates how even analysts working for brokerage firms (known as sell-side analysts) can shy away from a stock when investors are exuberant.

Leaving the software companies in the same order, here is a summary of the analysts’ opinions about the stocks:

Click the tickers for more information.

Read: Tomi Kilgore’s guide to the wealth of information available for free on the MarketWatch quote page

It is fair to say that even though eight of the 10 stocks have majority buy or equivalent ratings, most are considered to be fairly priced according to the 12-month price targets. Four of the stocks were priced above the targets as of Wednesday’s close. And Palantir stood out, not only with a price target 43% below the consensus price target, but with 35% sell or equivalent ratings.

Among the S&P 500, there are no stocks with majority sell ratings. This might be because an analyst will typically believe that any negative information about a company is already baked into the share price.

For Palantir, having such a high level of sell ratings might reflect analysts’ belief that investors have gotten carried away with the company’s success.

Among the S&P 500, only four companies have higher percentages of sell or equivalent ratings than Palantir does, among analysts polled by FactSet.

Meanwhile, Microsoft’s stock is almost universally beloved. Microsoft is “winning the cloud and AI war,” HSBC’s Stephen Bersey wrote last month.

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