The AI industry is enjoying explosive growth and has become an ideal area for investment. The forecast estimates that the AI market will expand from $244 billion in 2025 to $1 trillion by 2031. Palantir Technologies (pltr 2.39%)) and nvidia (NVDA) 2.53%)).
Palantir shares have lost more than 400% by June 20th over the past 12 months. Nvidia has seen a surge in stock from its 52-week low of $86.62 in April to nearly $153.13 in January.
Both companies offer reasons to invest in stocks, but if you have to choose one, is AI investment better in the long term? Let’s take a look at Palantir and Nvidia to get to the answer.
Image source: Getty Images.
For Palantir stocks
Palantir is a compelling investment choice due to the huge success of the Artificial Intelligence Platform (AIP). Since the launch of AIP in 2023, the company’s business has been booming.
For example, in the first quarter, revenues increased 39% year-on-year to $883.9 million. “The relentless demand for AIP continues to drive outperformance despite historically being the slowest quarter due to business seasonality,” said Ryan Taylor, Palantir’s highest income and legal officer.
A strong start to 2025 helped the company increase its full-year sales guidance from $3.7 billion to $3.9 billion. This is a significant increase from 2024’s revenue of $2.9 billion.
Not only is AIP successful, but the company is expanding revenue opportunities by offering new AI products. One is warp speed. This uses AI to increase US manufacturing efficiency, such as handling resource plans and predicting supply chain changes.
CTO Shyam Sankar said of Warp speeds that “both adoption and product development rates are exceeding expectations.”
Palantir’s sales growth has led to strong financials. Net income for the first quarter reached $227.7 million, more than doubled in 2024 to more than $106.1 million. The company’s free cash flow (FCF) was $370.4 million, an impressive 42% increase from the previous year.
Why consider Nvidia stocks?
The rationale for Nvidia’s appeal as an AI investment begins with the leadership of AI semiconductor chips. Market share in this sector is estimated to be above 70%.
Nvidia’s popular AI chips supported sales to $44.1 billion in the first quarter, which ended April 27th, up 69% from the previous year.
Last year, Nvidia introduced Blackwell, the latest AI computing architecture, and has already announced Vera Rubin as its successor. Vera Rubin is scheduled to arrive in 2026.
What makes Nvidia’s new technology appealing to customers is that it is designed for an age of AI reasoning, where AI can more closely mimic human thinking. This ability is essential for Agent AI. This refers to an AI system that allows you to make decisions and complete tasks on your own.
Nvidia’s popular hardware is just part of its strength. It also offers software called Compute Unified Device Architecture (CUDA). CUDA is an essential tool for customizing NVIDIA hardware when building AI systems, which increases switching costs.
Like Palantir, Nvidia’s finances are excellent. First quarter net income rose 26% year-on-year to $18.8 billion, with FCF reaching $26.1 billion, up 75% from $14.9 billion the previous year.
However, Nvidia’s global leadership in AI chips has stepped back in China due to US government restrictions on the sale of AI components. According to the news report, Nvidia has approved to modify its hardware specifications and start selling to China again.
Even without China, Nvidia is ready for years of growth as businesses and governments rush to build AI capabilities. “Nvidia stands at the heart of this deep transformation, as we recognize countries around the world as a critical infrastructure, like electricity and the Internet.”
Decide between Palantir and Nvidia
Palantir and Nvidia are both strong businesses, so choosing them is a challenge. Stock valuations are one factor that can help with this decision.
Let’s take a look at the price (P/E) ratio for each company. This shows whether investors are willing to pay the company’s revenue worth $1, based on 12 months of succession.
Data based on data YCHARTS.
As the chart shows, Nvidia’s P/E multiples are just a small part of Palantir, indicating that Nvidia is a better value. In fact, Palantir’s P/E ratio has risen over the last few months, suggesting that inventory is too high.
This important factor makes Nvidia’s stock a great investment in Palantir. Beyond the reviews, we are looking to advance AI Tech’s evolution as Nvidia’s established leadership in AI and the long-standing success of AI Tech.
