Can Palantir Outperform NVIDIA, and Should You Buy the Stock?
The advent of artificial intelligence (AI) has made semiconductor behemoth NVIDIA Corporation NVDA and data-mining specialist Palantir Technologies Inc. PLTR Wall Street darlings, with their shares witnessing massive gains. But this year, NVIDIA’s shares have fallen 15.1%, while Palantir’s shares have gained 21.5% amid Trump tariff woes. Does this mean Palantir has more growth potential and investment appeal? Let’s explore –
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NVIDIA’s share of over 80% in the growing graphics processing unit (GPU) market gives the company a competitive edge over its peers. Among the developers, NVIDIA’s CUDA software platform is in more demand than Advanced Micro Devices, Inc.’s AMD ROCm software platform. The change is unlikely due to the complexity of infrastructure transitions.
There is insane demand for NVIDIA’s both new and older chips. The new-generation Blackwell chips with faster AI interfaces are popular among prominent tech firms. Meanwhile, the older Hopper chips maintained steady demand due to their superior quality compared to rival Intel Corporation INTC.
AI data center spending is also rising, a boon for NVIDIA. Major cloud computing stocks are poised to invest nearly $250 billion in AI data center infrastructure, purchasing GPUs to meet the growing demand for AI workloads.
For now, Microsoft Corporation MSFT, one of NVIDIA’s primary customers, has scaled back on some of the data center projects. However, competitors Amazon.com, Inc. AMZN and Alphabet Inc. GOOGL have stepped in to fill the gap for NVIDIA.
Palantir’s Artificial Intelligence Platform (AIP) has been a grand success among existing and new customers owing to its capability to automate tasks beyond human capacity. AIP helps its clients decode complex information by applying generative AI in the decision-making workflows.
From International Data Corp. to Forrester Research, AIP’s prowess was praised by all. Palantir saw a 43% increase in customer count in the fourth quarter, thanks to AIP’s popularity. Its customer base expanded into the private sector beyond government clients, boosting revenue growth.
The company’s revenues rose 36% in the fourth quarter, with Palantir expecting revenues to increase 31% year over year in the current year. Moreover, the company’s remaining performance obligation in the fourth quarter surpassed current revenue growth, indicating strong upcoming growth.
Dominance in the GPU market, persistent demand for chips, and an uptick in AI infrastructure spending should help the NVIDIA stock scale upward in the long term.