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Palantir vs. Nvidia: The AI Stock Showdown of 2024-25
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Published in Stocks and Investing on Sunday, December 21st 2025 at 13:31 GMT by The Motley Fool- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
Better AI Stock? Palantir vs. Nvidia – A Side‑by‑Side Snapshot
The AI boom of 2024–25 has turned the market into a playground for software and chip companies alike. Two firms that have consistently appeared on “AI‑ready” watchlists are Palantir Technologies (PLTR) and Nvidia (NVDA). While both are riding the generative‑AI wave, their business models, growth engines, and risk profiles differ markedly. Below is a concise synthesis of the Motley Fool’s comparison piece, “Better AI Stock? Palantir vs. Nvidia,” which digs into why the two could appeal to the same investor yet demand distinct considerations.
1. Business Foundations: Software vs. Chip
Palantir
- Core Offerings: Palantir’s Foundry and Gotham platforms are data‑integration and analytics engines used by governments, finance, and health‑care clients. The company’s AI narrative is centered on “data‑first” solutions that empower enterprises to derive insights and automate processes.
- Revenue Mix: In FY 2024, 74% of Palantir’s $2.2 billion revenue came from commercial contracts, with the remaining 26% from government, which has a higher margin profile.
Nvidia
- Core Offerings: Nvidia is primarily a GPU manufacturer but has evolved into a leader in AI infrastructure. Its GPUs are the backbone of large‑language‑model (LLM) training, inference, and edge AI applications. The company also sells data‑center platforms (A100, H100) and software (CUDA, Triton).
- Revenue Mix: In FY 2024, 69% of the $27 billion revenue was from data‑center units, 20% from automotive, and the rest from gaming and professional visualization.
2. Growth Drivers
| Factor | Palantir | Nvidia |
|---|---|---|
| AI Adoption Speed | High – Palantir leverages its data‑integration moat to onboard AI‑ready clients in finance and public‑sector. | Extremely high – GPUs are the only viable option for LLM training; demand is expected to rise with GPT‑5 and beyond. |
| Product Innovation | Incremental – Foundry updates, new AI‑centric modules (e.g., “Foundry AI”), but growth is tied to contract renewals. | Radical – Continuous GPU architecture upgrades (Ada Lovelace, Hopper) and new AI‑accelerated chips (Grace) keep the company ahead of competitors. |
| Geographic Expansion | Growing presence outside the U.S., particularly in Europe and Australia. | Global footprint, with data‑center customers in North America, Europe, APAC. |
| Capital Expenditure | Low – Software‑centric, minimal R&D spend relative to revenue (~15%). | High – Heavy spending on fabs, R&D (~30% of revenue), but amortized over high unit margins. |
3. Valuation Snapshots (FY 2025)
| Metric | Palantir | Nvidia |
|---|---|---|
| P/E | 45x (forward) | 38x (forward) |
| PEG | 1.8 | 1.6 |
| EV/Revenue | 11.2 | 5.7 |
| EV/EBITDA | 8.4 | 11.5 |
Palantir’s higher EV/Revenue reflects the market’s premium on its “future‑state” data‑platform vision, whereas Nvidia’s tighter EV/Revenue signals confidence in its AI‑chip revenue stream. Investors often see Palantir’s valuation as “growth‑driven” and Nvidia’s as “earnings‑driven.”
4. Risk Profile
Palantir
- Customer Concentration: 15% of revenue comes from its top five clients, making contract renewals critical.
- Regulatory Risks: As a data‑platform for governments, changes in privacy laws or procurement budgets could impact sales.
- Execution Risk: Scaling the Foundry platform to compete with larger data‑platforms like Snowflake is an ongoing challenge.
Nvidia
- Supply‑Chain Risk: Heavy dependence on TSMC and other foundries; any silicon shortage could constrain revenue.
- Competition: AMD’s Radeon Instinct GPUs and Intel’s Xe GPUs pose incremental threats, though Nvidia currently dominates high‑end AI workloads.
- Geopolitical Tensions: U.S. export controls could limit sales to certain countries, especially for data‑center GPUs.
5. Recent Catalysts
- Palantir: Q4 2024 earnings report showed a 29% YoY revenue increase and a net income of $120 m, fueled by new government contracts. The company also announced an AI‑driven “data‑pipeline” partnership with a Fortune 500 retailer, suggesting deeper penetration into the retail sector.
- Nvidia: Q1 2025 earnings exceeded expectations with a 52% YoY revenue jump, largely driven by data‑center sales during the launch of the H100 GPU. Analysts noted that Nvidia’s AI‑chip stack is now “essential” for large‑language‑model infrastructure, giving the company a near‑term moat.
6. Bottom‑Line Takeaway
| Question | Palantir | Nvidia |
|---|---|---|
| Who’s the best long‑term AI bet? | For investors willing to pay a premium for data‑platform dominance and a high‑growth narrative, Palantir remains compelling. | For those who value proven high‑margin chip manufacturing, massive data‑center demand, and a clear path to recurring revenue, Nvidia is a stronger play. |
| Which stock offers more immediate upside? | Palantir’s recent contract wins suggest a shorter‑term surge, but the company is still far from mature profitability. | Nvidia’s consistent earnings and high capital efficiency offer more tangible near‑term upside. |
| Risk appetite? | High – concentration and regulatory risks. | Medium – supply‑chain and competitive pressures. |
7. Additional Context for Savvy Readers
- AI‑Infrastructure Market Size: Gartner forecasts the AI infrastructure market to reach $170 billion by 2027, up from $35 billion in 2024. Palantir’s data‑platform is an enabler, while Nvidia’s GPUs are the enabler of the enabler.
- Tech Stock Tax Implications: Both companies are subject to the “Section 1245” depreciation recapture on equipment and data‑center assets. Nvidia’s heavy cap‑ex can produce favorable tax attributes.
- Regulatory Landscape: The U.S. Office of the Director of National Intelligence recently issued guidance requiring that any AI platform used by federal agencies must undergo a “data‑privacy impact assessment.” Palantir is positioned to meet this demand, while Nvidia must address export‑control compliance.
Bottom Line
If your investment thesis centers on software‑first, data‑centric AI solutions with a strong public‑sector focus, Palantir is the more attractive proposition—albeit at a higher valuation and higher risk profile. If your thesis is built around high‑margin chip manufacturing and the inexorable rise of data‑center demand for AI workloads, Nvidia’s strong track record and superior economics give it the edge. Both companies illustrate how AI can shape divergent yet profitable business models, and choosing between them comes down to whether you prefer “platform” or “infrastructure” in the AI ecosystem.
Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/12/21/better-ai-stock-palantir-vs-nvidia/ ]
