Is Palantir the next Nvidia?

In 2024, the shares of Palantir (NYSE: PLTR) and Nvidia (NASDAQ: NVDA) have dominated the stock market, recording significant gains thanks to their ventures in artificial intelligence (AI).

While Nvidia has led the AI market rally, PLTR is now seemingly matching the chipmaker’s growth.

As of press time, PLTR was trading at a new all-time high of $50.68, reflecting a 23% gain in 24-hours. On a year-to-date basis, the American software company has rallied 205%. On the other hand, NVDA is up 190% in 2024.

These returns indicate that Palantir has officially outperformed the biggest name in the AI space in 2024.

Palantir’s push past the $50 resistance was aided by the company’s strong Q3 earnings report. 

During the quarter ending September 2024, Palantir reported revenue growth of 30% year-over-year (YoY), hitting $725 million. Net income was $144 million, marking its largest profit in two decades.

Distinction between Palantir and Nvidia 

While Palantir’s stock price is witnessing astronomical growth similar to Nvidia’s, the two companies have massive distinctions. 

Nvidia is a dominant player in hardware, particularly GPUs for AI processing, while Palantir’s strength lies in software, especially its data analytics tools targeting government and enterprise.

Another key distinction is their valuation. Nvidia’s P/E, though high, reflects its proven earnings growth, while Palantir’s much higher P/E signals high expectations for future revenue. 

This difference leaves Palantir more exposed to short-term setbacks than Nvidia’s established profitability.

Can PLTR stock take on NVDA? 

Although the two companies differ in valuations, one topic of debate is whether Palantir’s recent momentum makes it the new Nvidia.

To this end, market commentator Shay Boloor stated in September that Palantir, thanks to the company’s Artificial Intelligence Platform (AIP), has the potential to take on Nvidia. 

Like NVIDIA’s CUDA revolutionized computing by enabling GPUs to power various applications, AIP aims to streamline AI integration across defense, healthcare, and finance sectors.

According to Boloor, AIP could become essential for enterprise operations globally by providing a seamless interface for managing large-scale data and machine learning models. 

As demand for comprehensive AI solutions grows, Palantir’s AIP has the potential to drive substantial market growth, positioning the company as a future tech mega-cap.

On the other hand, a stock market technical analyst using the pseudonym The Long Investor, in an X post on November 5, pointed out that as the market reacts to impressive earnings reports, it’s crucial to recognize that not every company can replicate Nvidia’s performance. 

He noted that the semiconductor giant is a leader with exceptional metrics, justifying its significant market capitalization.

The expert mentioned that companies like Palantir may not yet match Nvidia’s fundamentals, calling for a tempered perspective when evaluating tech stocks in the current market.

Elsewhere, a technology stocks analyst by the pseudonym Amit observed that Palantir is gaining traction among retail and institutional investors. 

The analyst noted that Palantir’s growth potential over the next five years is compelling as one of the few pure-play AI software companies, especially as fund managers reconsider their portfolios in light of Nvidia’s success.

Wall Street take on PLTR stock 

Wall Street analysts have also offered mixed outlooks for Palantir stock after the impressive Q3 results.

For instance, Wedbush raised its price target from $45 to $57, citing growing confidence in Palantir’s AI strategy and enterprise demand. To put this strategy into perspective, analysts at the firm labeled Palantir the ‘Messi of AI.’

Mizuho acknowledged solid performance but raised valuation concerns due to lagging international growth. Conversely, William Blair pointed out that while government wins drove the earnings beat, U.S. commercial growth slowed to 59%, with only 2% growth in international revenue.

Morgan Stanley called the results a “blowout” but refrained from issuing a rating, while Deutsche Bank raised its price target from $21 to $26, maintaining a Sell rating without further comments.

Finally, as Palantir continues to see significant growth and mixed analyst outlooks, one lingering concern about the continuation of this momentum is the company’s valuation. Indeed, concerns have been raised that the equity might be too expensive and is pricing in future growth, making it susceptible to losses if the targets are not met.