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Nvidia (NVDA) and Palantir Technologies (PLTR) have seen their stock prices skyrocket this year, reflecting the accelerated adoption and deployment of artificial intelligence (AI) technology across industries.
Nvidia, often called the driving force behind the AI revolution, has seen its stock price climb a staggering 182% this year. Meanwhile, Palantir has grabbed the spotlight and outshone even Nvidia with a stellar 326% gain year-to-date, reflecting the market’s enthusiasm for its AI-driven platform and data solutions.
With Palantir outperforming Nvidia in returns so far, let’s explore which of these two AI leaders might offer greater upside potential as we look ahead to 2025.
Nvidia: A Titan in AI Hardware
Nvidia’s leadership in AI hardware is undisputed, thanks to its dominance in GPUs and data center technology. Although its stock has plateaued since its third quarter earnings release, this lull may be temporary. The company’s revenue and earnings exceeded expectations, but its cautious Q4 guidance and narrowing profit margins weighed on market sentiment.
Despite these near-term challenges, Nvidia’s long-term trajectory remains promising. The company is benefiting from robust demand for its cutting-edge Hopper platform, including the newly launched H200 series, which has set records for the fastest sales ramp in Nvidia’s history.
The introduction of Nvidia’s Blackwell chips in 2025 will likely unlock significant growth. Customer demand for this next-generation technology is already outpacing supply, suggesting strong revenue potential. Meanwhile, ongoing investment in AI infrastructure by cloud service providers ensures a steady market demand for Nvidia’s products.
In addition to its data center segment, Nvidia is poised to see growth in automotive applications and a rebound in gaming revenue. These factors, coupled with its AI leadership, position the company for sustained success.
Wall Street remains bullish on Nvidia, with analysts maintaining a “Strong Buy” consensus rating. While near-term headwinds may persist, the company’s pipeline and market dominance make it a compelling choice for long-term investors.
Palantir: AI-Driven Data Analytics Powerhouse
Palantir has emerged as a top player in the enterprise AI and data analytics sector, delivering extraordinary stock performance this year. Its rapid revenue growth, consistent profitability improvements, and strong cash flow position it well for long-term growth.
In Q3, Palantir reported its sixth consecutive quarter of accelerating revenue growth. The company’s AI Platform (AIP) is gaining significant traction, with 104 deals worth over $1 million closed during the quarter. This boosted total contract value by 33% year-over-year to $1.1 billion.
Palantir’s diversified revenue streams across government and commercial sectors further enhance its resilience. Government contracts grew 33%, fueled by increased demand from defense and intelligence agencies. Meanwhile, U.S. commercial revenue surged 54%, reflecting the growing adoption of AI in the software segment.
Financially, Palantir is well-equipped for future growth, with $4.6 billion in cash reserves to fund innovation and acquisitions. The company has raised its 2024 revenue guidance to $2.807 billion at the midpoint, up 26% year-over-year. This reflects management's confidence in Palantir's ability to sustain its red-hot momentum.
However, Palantir’s lofty valuation is a concern. With a price-to-sales ratio of 73.6x, its stock is significantly more expensive than its peers. Such a high premium could limit the upside, particularly if revenue growth slows. As a result, Palantir holds a “Hold” consensus rating from analysts.
The Verdict: Should You Buy Nvidia or Palantir Stock?
Both Nvidia and Palantir are well-positioned in the AI space, and each has strong growth prospects. Nvidia benefits from its dominant position in AI infrastructure, with continued demand for its products and the potential for significant growth in the data center, automotive, and gaming segments. On the other hand, Palantir’s strong financial performance and growing adoption of its AI solutions across commercial and government sectors make it a compelling high-growth stock.
Overall, both stocks are expected to perform well in 2025. Nvidia’s large scale, diversified business model, and leadership in AI infrastructure may give it a slight edge in the long run. However, Palantir’s rapid growth and strong position in AI-driven data analytics make it a stock to watch closely in 2025.
