The Case for Mid-Caps

In the world of investing, mid-cap stocks are often overshadowed by the giants of the S&P 500 or the adrenaline of small caps. But for savvy investors, mid-caps can be a golden sweet spot. These are companies big enough to have proven business models but still small enough to grow at a rapid pace.

In today’s market, defined by AI acceleration, digital transformation, and healthcare innovation, several mid-cap names are emerging not just as promising, but as pivotal players in the next wave of growth.

Let’s look at five standout mid-cap growth stocks that are making headlines for the right reasons—and may be worth a serious look heading into the end of 2025 and beyond.

1. Credo Technology Group (CRDO)

Market Cap: ~$5B
Sector: Semiconductor / AI Infrastructure

Credo Technology is one of those rare companies that fly under the radar despite being deeply embedded in one of the most important tech movements of our time—AI infrastructure. The company builds the high-speed connectivity hardware and IP that make massive AI workloads possible in data centers.

Rather than chasing AI hype with software or chatbot tools, Credo focuses on the plumbing: electrical cables, optical digital signal processors, and high-performance SerDes IP. These are the backbone components that allow AI servers to talk to each other at lightning-fast speeds with minimal power consumption.

Credo has grown rapidly, with explosive revenue increases and expanding partnerships with hyperscale cloud providers. And it’s not just growth—it’s profitable, with strong margins and defensible technology. Its low-power design is especially appealing as energy becomes a top concern in AI data center scaling.

Why it matters: As demand for AI compute and bandwidth grows, Credo is poised to be a behind-the-scenes giant—benefiting regardless of which AI platform wins.

Investor appeal: Strong year-to-date performance, healthy fundamentals, and long-term relevance in the AI infrastructure stack.

2. Lumentum Holdings (LITE)

Market Cap: ~$6.8B
Sector: Optical Networking / Semiconductors

Lumentum has undergone a quiet transformation from a legacy optical component supplier to a strategic AI enabler. With the explosion of AI workloads, data centers are being re-architected—and that means more lasers, more optics, and more sophisticated network components. Lumentum delivers on all three fronts.

The company’s recent product launches focus on high-speed optical lasers and switches used in AI-centric cloud environments. Lumentum is increasingly being adopted by large cloud service providers and telecoms, both of whom are upgrading to support higher throughput and lower latency networks.

It also helps that Lumentum has been showing technical strength in the market, consistently trending upward with strong institutional accumulation. Wall Street is beginning to take notice, but the stock is still well below mega-cap multiples, offering room to grow.

Why it matters: The optical build-out is essential to keep pace with the rise in AI and edge computing. Lumentum is riding that wave.

Investor appeal: Exposure to a structural tailwind, solid financials, and growing demand from big tech and telecom players.

3. UiPath (PATH)

Market Cap: ~$8B
Sector: Enterprise Software / AI Automation

UiPath is a leader in robotic process automation (RPA), helping businesses streamline repetitive tasks through intelligent software robots. In 2025, the company has successfully shifted from simply automating basic workflows to integrating AI-driven decision-making across operations.

By weaving in large language models and context-aware automation, UiPath now enables businesses to automate more complex tasks—think invoice processing, HR onboarding, or compliance checks—without human intervention. This makes it a vital piece of the modern digital enterprise stack.

UiPath’s long-term growth outlook is solid, with high teens EPS growth projected over the next several years. The company continues to expand its enterprise customer base and increase its wallet share through upselling and platform expansion.

Why it matters: As companies look to cut costs and boost efficiency post-AI hype, automation tools like UiPath are becoming core enterprise software.

Investor appeal: Growing TAM, improving operating leverage, and staying power in enterprise AI deployment.

4. Soleno Therapeutics (SLNO)

Market Cap: ~$2.3B
Sector: Biotechnology / Rare Disease Therapeutics

In the biotechnology space, few stories are as compelling as Soleno Therapeutics. The company recently received FDA approval for its flagship drug for Prader-Willi syndrome (PWS)—a rare and debilitating genetic disorder with no previously approved treatments.

Its treatment, Vykat XR, is not only novel but has already seen strong demand in early rollout. Prescriptions are rising fast, and Soleno is actively scaling production to meet what appears to be significant pent-up demand. Early data suggests meaningful improvement in patient outcomes, which is boosting both investor confidence and patient advocacy support.

Importantly, Soleno is also exploring label expansion opportunities for the same therapy in adjacent conditions. That could turn a small initial opportunity into a broader revenue engine over time.

Why it matters: Rare diseases often present the highest unmet medical needs—and the clearest paths to premium drug pricing and regulatory support.

Investor appeal: Commercial launch traction, potential for M&A interest, and emotional resonance with investors focused on impact.

5. Braze (BRZE)

Market Cap: ~$6.5B
Sector: Marketing Tech / Customer Engagement

Braze operates in a different corner of the tech world: customer engagement software. But don’t let that fool you—it’s one of the most technically sophisticated platforms in its class, using AI to help brands personalize and optimize how they communicate with customers.

Its software is used by companies to send intelligent, real-time messages across channels like email, mobile apps, and web. Think tailored offers, notifications, or onboarding flows triggered by a user’s behavior—not just mass marketing blasts.

As the competition for consumer attention intensifies, Braze’s platform becomes more critical. Net revenue retention remains strong, and the company just crossed into adjusted profitability, signaling a turning point in operational scale.

Why it matters: The future of marketing is personalized, data-driven, and automated. Braze makes that possible for some of the biggest consumer brands in the world.

Investor appeal: High recurring revenue, strong customer loyalty, and expanding use cases in a fast-growing digital marketing landscape.

Comparative Summary: Mid-Cap Growth at a Glance

Risks and Considerations

• Valuation Sensitivity: Growth names can command high multiples—any earnings miss can cause outsized reactions.

• Regulatory Risk (Biotech): Soleno faces reimbursement and compliance hurdles typical in healthcare.

• Cyclicality (Semis/Optics): Credo and Lumentum depend on CAPEX cycles from hyperscalers.

• Competitive Pressure (Software): UiPath and Braze operate in increasingly crowded SaaS markets.

• Execution Risk: These companies must continue to innovate and scale without sacrificing margin discipline.

Final Thoughts

 They operate at the edge of technological disruption—whether it’s powering the next phase of AI, revolutionizing business automation, delivering life-changing therapies, or helping brands engage their customers smarter.

While mid-caps may lack the name recognition of their large-cap peers, they often reward those who do the research and hold through volatility. In a year where agility matters as much as size, these stocks could lead the charge.

Steve Macalbry

Senior Editor,

BestGrowthStocks.Com

Disclaimer: The author of this article is not a licensed financial advisor. This article is intended for informational purposes only. It should not be considered financial or investment advice. We have not been compensated for the creation or distribution of this article and we do not hold any form of equity in the securities mentioned in this article. Always consult with a certified financial professional before making any financial decisions. Growth stocks carry a high degree of risk, and you could lose your entire investment.