AI Investment Showdown: Palantir vs. NVIDIA
In the rapidly evolving world of artificial intelligence (AI), two companies have emerged as frontrunners in the investment arena: Palantir Technologies Inc. (PLTR) and NVIDIA Corporation (NVDA). Both have experienced significant gains, capturing the attention of Wall Street investors. This year, Palantir’s shares have notably outperformed NVIDIA, with a staggering increase of 324.8% compared to NVIDIA’s 177.2% rise.
Given these impressive figures, a pressing question arises: Is Palantir a better investment than NVIDIA for the upcoming year? Let’s delve into the details to find out.
Palantir’s AI Platform: A Game Changer
Palantir has made significant strides with its Artificial Intelligence Platform (AIP), which has gained widespread popularity. This platform enables businesses to integrate large language models into their operations, thereby enhancing profitability. The AIP’s success is expected to drive Palantir’s expansion and attract new customers.
In the third quarter of 2024, Palantir’s customer base grew by 39% year-over-year. Additionally, transactions exceeding $1 million increased by 30%, resulting in larger deal sizes. These developments have contributed to Palantir’s robust revenue and earnings performance in the third quarter, fueled by the momentum of the AIP.
Palantir has also successfully generated business from its existing customers, as evidenced by a net-dollar retention rate of 118% in the third quarter, surpassing the previous year’s rate of 107%.
Looking ahead, Palantir’s future appears promising. The company’s remaining deal value surged by 22% year-over-year in the previous quarter, reaching $4.5 billion. Consequently, Palantir anticipates its 2024 revenues to hit $2.8 billion, marking a 25% increase from 2023’s $2.23 billion. The Zacks Consensus Estimate for Palantir’s earnings per share stands at $0.38, reflecting a 31% rise from the previous year.
NVIDIA’s Dominance in the GPU Market
NVIDIA’s stronghold in the graphic processing units (GPU) market is expected to drive its stock price in the near term. CEO Jensen Huang has confirmed that demand for NVIDIA’s Hopper architecture remains robust, even with the highly anticipated launch of next-generation Blackwell chips.
This indicates that customers continue to trust NVIDIA’s existing chips, as well as the new ones, due to their superiority over competitors like Advanced Micro Devices, Inc. (AMD) and Intel Corporation (INTC).
The demand for NVIDIA’s cutting-edge Blackwell chips has skyrocketed, and their launch is expected to boost NVIDIA’s shares. These chips are designed to process large volumes of data more efficiently. For instance, the GB200 NVL72 system in Blackwell outperforms the H100 by running AI inference 30 times faster. As a result, major companies such as Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), and Oracle Corporation (ORCL) have become buyers of Blackwell chips.
Comparing the Investment Potential
When comparing Palantir and NVIDIA, both companies present compelling investment opportunities, each with its unique strengths and market positions. To help investors make an informed decision, let’s summarize the key points:
- Palantir Technologies Inc. (PLTR):
- Significant share price increase of 324.8% this year.
- Strong growth in customer base and deal sizes.
- Promising future revenue projections and earnings growth.
- NVIDIA Corporation (NVDA):
- Dominance in the GPU market with a 177.2% share price increase.
- Continued demand for existing and new chip architectures.
- Strong partnerships with major tech companies.
Ultimately, the choice between Palantir and NVIDIA as an investment depends on individual preferences and risk tolerance. Palantir offers a promising growth trajectory with its AI platform, while NVIDIA’s established market presence and innovative chip technology make it a formidable contender.
As the AI landscape continues to evolve, both companies are well-positioned to capitalize on emerging opportunities, making them attractive options for investors seeking exposure to the AI sector.
Originally Written by: Tirthankar Chakraborty
