Software company Palantir Technologies (NYSE: PLTR) and chip company Nvidia (NASDAQ: NVDA) are two of the hottest stocks on Wall Street. Both stocks are up over 240% over the past year and have fierce loyalty among investors.
Is one artificial intelligence (AI) stock better than the other? To find out, I compared them head-to-head to see why they’re thriving and whether they can continue. It was a very close race, but one stood out just ahead of the other.
Here is what you need to know.
Meeting these two very different companies
Both stocks soared due to the fantastic performance of their underlying businesses. However, these two AI companies are very different. Nvidia spent years specializing in high-performance GPUs, which became ideal for data centers and AI. Nvidia’s high-quality products and CUDA software, which helps customers efficiently use their GPUs power, have led to Nvidia grabbing an early stranglehold on the AI chip market — an estimated 80% to 90%.
On the other hand, Palantir builds custom software applications for both government and commercial applications. It runs three software platforms: Gotham, Foundry, and AIP for AI applications. You can think of Palantir as an operating system that helps organizations use their data. The company’s intent is that it augments human intelligence; it doesn’t replace it.
A closer look at each company’s growth
From a pure numbers standpoint, Nvidia is growing leaps and bounds faster than Palantir. You can see below how both companies began accelerating revenue growth in mid-2023, but Nvidia soared on massive data center spending from big technology customers, mainly in the “Magnificent Seven.” It could be fair to wonder how long this enormous boost in data center spending from big tech will continue.
One possibility is that these companies start producing custom chips in-house, weaning themselves off of Nvidia’s. That could hurt long-term growth for a company currently getting most of its revenue from a small handful of customers.
Story continues
NVDA Revenue (Quarterly YoY Growth) Chart
Speaking of Palantir, the company…
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