Artificial intelligence stocks have been grabbing the most headlines, but a bunch of detect stocks have the chance to outperform the hot AI sector in 2025. All three of the stocks you’ll hear about today have outperformed Nvidia over the past year. 

The education sector is booming as more people look for alternatives. More people are questioning the value of a college degree due to soaring costs without the same guarantee of landing a high-paying job after securing a degree. Some alternative methods are offering more affordable education and access to specialized education in relevant career skills.

These trends are just getting started, and it’s possible that a generation straddled by student debt will become more vocal about the risks of a college education. However, it’s not just them. College graduates and people who want to learn for fun are also seeking out educational tech companies. These three growth stocks are poised to benefit from the trend.

Stride (LRN)

Shares are up by roughly 120% over the past year, and that includes a 26% year-to-date surge as investors cheered on the company’s latest earnings report. The educational tech company delivered 16.3% year-over-year revenue growth in Q2 FY25. Net income was up by 44.2% year-over-year, indicating a rising profit margin. The company ended the quarter with a 16.4% net profit margin.

Profit margin and revenue growth put an extra spotlight on the stock’s 22.5 P/E ratio, which looks like a bargain. The company’s market cap is just shy of $6 billion, which gives it plenty of additional market share to gobble up. Alternative education and homeschooling are still in their early innings, and Stride looks like a key beneficiary.

Duolingo (DUOL)

Duolingo is the next Edtech stock to buy that looks promising, albeit at a higher valuation. A 138 forward P/E ratio may be a lot for value investors to endure, but the company is high quality. That’s why shares have roughly doubled over the past year.

Duolingo makes it easier for people to learn new languages, and its gamified nature encourages people to log into the app more often. That additional activity results in more advertisements and boosts the demand for Duolingo’s paid subscription, a feature that removes all ads. The company is also expanding into other subjects like math and music. Such initiatives can attract new markets and lead to higher revenue growth.

Financial growth rates continue to remain impressive for the company. Duolingo posted 40% year-over-year revenue growth in Q3 2024, while net income jumped from $2.8 million in Q3 2023 to $23.4 million in Q3 2024. High growth rates in billings, paid subscribers, daily active users, and monthly active users suggest that those high growth rates will continue into future quarters.

Legacy Education (LGCY)

Legacy Education is the final education stock on this list. It’s a new market entrant that IPO’ed in September. However, investors quickly spotted the opportunity, bringing the stock up by roughly 115% since its IPO.

What makes Legacy Education so special? It’s a nationally accredited for-profit education company that operates 3 schools and 5 campuses. However, unlike most colleges, Legacy Education specializes in relevant career skills in the health industry instead of being a one-size-fits-all institution. Legacy Education has a 78% placement rate across its colleges, which means most of its students are landing jobs in the fields they study at Legacy Education’s colleges. Legacy Education recently started to offer online programs, which will expand its market.

Financial results have been good for several quarters, including Q1 FY25. During this quarter, revenue increased by 35.1% year-over-year to $14.0 million. A 25.4% student population growth rate made this possible, and it also resulted in $2.1 million in net income. Each of the past few quarters has featured 30%+ year-over-year revenue growth.

Legacy Education only has a $100 million market cap, so $2.1 million in quarterly net income indicates a low valuation. The stock currently has a 15.6 P/E ratio, but that valuation should get much lower as the company continues to report earnings.

As of this writing, the author had long positions in LRN, DUOL, and LGCY