Artificial Intelligence: Palantir or Nvidia, which is better?

The actions of Palantir Technologies (NASDAQ: PLTR) and of Nvidia (NASDAQ: NVDA) have seen remarkable performance this year, driven by increased demand for artificial intelligence (AI) hardware and software. However, it is important to note that one of these stocks significantly outperformed the other.

With its stock up 345% (as of now), Palantir far surpasses Nvidia’s 188% jump this year. Does this make Palantir the better AI stock pick among these two companies? Let’s analyze the situation.

Palantir Technologies in the spotlight

Nvidia is recognized as the leading chip supplier for companies looking to train AI models, but Palantir stands out by helping companies and governments put these models into production. Even more, the growing adoption of Palantir’s Artificial Intelligence Platform (AIP), which enables the integration of large-scale language models (LLMs) and generative AI into business operations, has significantly accelerated the growth of the company and its revenue pipeline.

In the third quarter of 2024, its revenue increased by 30% from the previous year, reaching $726 million. For comparison, Palantir’s revenue had grown 17% in 2023. The company’s growth intensified as the year progressed, with Palantir management noting during the November earnings call that she “continues to see AIP-powered momentum in both expansions and new customer acquisitions.”

In addition, the number of new Palantir customers increased by 39% compared to the previous year. Deal sizes have also increased: the number of deals worth at least $1 million grew 30% year over year, reaching 104 deals last quarter.

The company isn’t just attracting new customers for its AI software platform; it also manages to win more contracts from its existing clients. This can be seen in Palantir’s 118% revenue retention rate in Q3, a metric that compares revenue from the previous 12 months at the end of a quarter with that of the same customer group the year before. The retention rate for the same quarter the previous year was 107%, suggesting increased adoption of its platform by existing customers.

Palantir also has a strong revenue pipeline that should allow it to maintain its impressive growth in the years to come. This is reflected in the company’s total remaining contract value, which stood at $4.5 billion, showing an increase of 22% from the previous year. This growth is encouraging for Palantir because this value represents the total amount of the company’s contracts remaining at the end of a period.

All of this explains why Palantir raised its annual forecast, expecting to reach revenue of more than $2.8 billion in 2024, a 25% increase from $2.23 billion in 2023 Estimates for the next two years have also been adjusted upwards.

As the chart above shows, Palantir is expected to see its revenue grow at a rate of more than 20% over the next two years. However, don’t be surprised to find that the company could well see even stronger growth given the enormous potential in the AI ​​software platform market, a sector that is expected to grow at an annual rate of nearly 41 % by 2028.

Palantir therefore has the potential to remain a top AI stock for a long time.

Nvidia: another perspective

Although Nvidia’s stock performance this year has lagged that of Palantir, investors should not underestimate the crucial role Nvidia plays in the rise of AI. The chipmaker holds more than 85% of the market for graphics processing units (GPUs) for data centers dedicated to AI, which explains its exceptional growth quarter after quarter.

It should be noted that Nvidia’s domination of the AI ​​GPU market is such that its competitors are having difficulty establishing themselves. The brand has reportedly sold out all of its Blackwell graphics card capacity for the coming year, but is taking steps to ensure an increase in supply.

Unsurprisingly, Nvidia is expected to record another year of significant growth in fiscal 2026, following an exceptional performance this year. Its revenue is expected to see an increase of 112% in 2025 to reach $129 billion, and the forecast for the following years is also very promising.

Additionally, Nvidia remains a growth stock to favor for the long term, even after the remarkable gains it has made in recent years. Catalysts such as growing demand for AI chips and enterprise software, the transition to accelerated computing, the adoption of digital twins, and increased chip content in cars could enable Nvidia to access a colossal $1.7 trillion addressable market.

It’s also worth noting that Nvidia could pose a threat to Palantir in the enterprise AI software space. The financial director, Colette Kress, mentioned during the last results conference:

We expect Nvidia AI Enterprise revenue to grow more than twice last year, and our pipeline continues to grow.

Overall, our software, services and support revenues are running at an annualized rate of $1.5 billion, and we expect to close this year with an annualized run rate of over $2 billion.

So, Nvidia appears to be a more well-rounded AI stock pick compared to Palantir. However, this is not the only reason why she seems to be the better choice of the two.

The verdict

It has been established that Nvidia is growing at a faster rate than Palantir. More importantly, Nvidia is expected to continue growing faster than Palantir next year, despite its much larger size. All of this highlights the opportunity to invest in Nvidia stock rather than Palantir, especially when looking at the following chart.

Nvidia’s value for money is much more favorable than Palantir’s, despite higher growth. Indeed, Palantir’s valuation is so high that the 12-month median price target of $38 indicates a 50% fall from current levels. In contrast, Nvidia has a 12-month median price target of $175, which represents a 23% increase from its current price.

Additionally, Nvidia appears to be the better long-term AI stock pick as it targets a much larger addressable market with its growing presence in AI software and dominance in the hardware sector.

Our Vision

Through this analysis, it is perhaps important to remember that, in a field as dynamic as that of artificial intelligence, the capacity to adapt and innovate is essential for companies. Tracking these AI giants is critical because their evolution can not only transform their own economic trajectories, but also influence the entire technology landscape. The synergy between these two companies could also lead to future collaborations, shaping a future where AI becomes an essential tool for organizations of all sizes.