Prediction: 2 Artificial Intelligence (AI) Stocks Will Be Worth More Than Palantir Technologies in 3 Years

Shares of Palantir Technologies (NASDAQ: PLTR) are up 150% in the past year, and the company is currently worth $369 billion. I think AppLovin (NASDAQ: APP) and Shopify (NASDAQ: SHOP) can top that figure within three years. Here's what that would mean for shareholders:

• AppLovin is worth $176 billion. The stock must increase by 110% for that figure to reach $370 billion. If that happens in three years, the implied return is 28% annually.
• Shopify is currently worth $192 billion. The stock must increase by 93% for that figure to reach $370 billion. If that happens in three years, the implied return is 24% annually.

Here's what investors should know about these artificial intelligence stocks.

Image source: Getty Images.

1. AppLovin

AppLovin builds adtech software that leans on sophisticated artificial intelligence (AI) models. It earns most of its revenue from mobile games, with tools that help developers market and monetize applications. However, its new e-commerce advertising platform (still in beta) hit a billion-dollar revenue run rate within months of its launch.

AppLovin recently introduced a self-service dashboard on a referral basis, which not only includes better automation and measurement tools but also eliminates the friction that comes with manually onboarding clients. CEO Adam Foroughi says, "When we launch self-service globally, we expect it to unlock a massive opportunity."

Importantly, AppLovin has distinguished itself with its Axon recommendation engine, which leans on machine learning models to match advertiser demand with the most appropriate publisher supply. Ad spend has roughly quadrupled since the company launched Axon 2.0 in mid-2023, and Morgan Stanley (NYSE: MS) analysts say Axon is a "best-in-class machine learning ad engine."

Here's how AppLovin can top Palantir's current market value within three years: Wall Street expects the company's earnings to increase at 53% annually over the next three years, which makes the current valuation of 66 times earnings look reasonable. If AppLovin meets that consensus, its market value could increase 110% to $370 billion while its valuation falls to an even more reasonable 39 times earnings.

2. Shopify

Shopify provides a turnkey solution for omnichannel commerce. Its software lets merchants manage their businesses across physical and digital channels from a single dashboard. The company also provides adjacent services. The most important is payment processing, but the list includes other financial services and solutions for marketing, logistics, cross-border, and wholesale commerce.

Shopify's ability to simplify commerce for merchants of all sizes has helped the company secure a strong market position. Research company G2, which specializes in peer reviews, ranks Shopify as the most popular e-commerce and omnichannel commerce software on the market. Forrester Research has also recognized the company as a leader in wholesale commerce solutions.

Shopify is using artificial intelligence in multiple ways. The company has designed agentic AI tools to let consumers shop through a conversational interface. It has also designed AI tools that surface insights and automate merchant workflows, such as creating storefronts. Finally, the company uses AI internally to supercharge developer productivity, which lets it build quality software more quickly.

Here's how Shopify can top Palantir's current market value within three years: Wall Street expects the company's earnings to increase at 32% annually over the next three years, which makes the current valuation of 108 times earnings look expensive. But if Shopify matches the consensus, its market value could increase 93% to $370 billion while its valuation falls to a more tolerable 90 times earnings.

If forced to choose, I think AppLovin has a better shot at topping Palantir's current market value by 2028 simply because it trades at a more reasonable valuation. But Shopify has consistently beat earnings estimates in the past, and I think the company can make the cut if it capitalizes on key opportunities like onboarding larger enterprises, gaining share in wholesale, and drawing more international merchants to the platform.

Trevor Jennewine has positions in Palantir Technologies and Shopify. The Motley Fool has positions in and recommends Palantir Technologies and Shopify. The Motley Fool has a disclosure policy.