Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR) saw significant growth last year due to increasing demand for their artificial intelligence (AI) hardware and software solutions. However, in 2025, both companies are facing challenges. Nvidia’s stock has dropped by nearly 14%, while Palantir has also experienced a decline after a strong start to the year. Despite this, both companies are poised to benefit from lucrative markets, with Nvidia capitalizing on AI hardware demand and Palantir seeing growth in generative AI software.
If you’re considering investing in one of these AI stocks, let’s explore the options:
Nvidia:
Despite concerns about Nvidia’s growth sustainability, the company’s recent quarterly results show robust demand for its AI chips. In the fourth quarter of fiscal 2025, Nvidia reported a 78% year-over-year revenue increase to a record $39.3 billion, surpassing Wall Street expectations. Adjusted earnings also rose by 71% to $0.89 per share. The company expects $43 billion in revenue for the current quarter, indicating a 65% increase year-over-year. Nvidia’s latest Blackwell processors are poised to support growing customer demand and maintain its leading position in the AI chip market due to their versatility and cost efficiency.
Analysts have raised revenue growth projections for Nvidia for the current and upcoming fiscal years, with earnings expected to increase by 50% in the current fiscal year. The company’s dominance in the AI chip market, with an estimated 85% share, is likely to continue, supported by the efficiency and capabilities of its Blackwell architecture.
Overall, despite short-term challenges, Nvidia’s strong financial performance, product innovation, and market position make it a compelling choice for investment in the AI sector.
Nvidia anticipates a return to higher adjusted gross margins once production of its Blackwell processors is fully optimized. This improvement is expected to drive faster earnings growth, potentially surpassing analysts’ projections throughout the fiscal year. Moving on to Palantir Technologies, the company is a prominent player in the AI software platforms market, poised for significant growth as the industry expands. Market research suggests that the global AI software platforms market could escalate from $28 billion in 2023 to $153 billion by 2028, registering an annual growth rate exceeding 40%.
Palantir’s revenue surged by 29% in 2024, up from a 17% rise in the previous year, showcasing the company’s rapid expansion. With revenues nearing $2.9 billion in the prior year, Palantir has substantial room for growth in the burgeoning AI software platforms market. The company’s pace of securing new contracts aligns with the market’s growth projections, evident from the 40% year-over-year increase in remaining deal value (RDV) in the fourth quarter of 2024, totaling $5.4 billion.
The uptick in RDV indicates that Palantir is signing contracts at a faster pace than fulfilling them, setting the stage for enhanced revenue and earnings growth in the future. As the company onboards new customers who gradually sign larger contracts due to the efficiency gains from its Artificial Intelligence Platform (AIP), the revenue pipeline is expected to strengthen. Palantir observed a 43% year-over-year increase in overall customer count in the last quarter, suggesting potential for further RDV growth.
Increased spending from existing customers is also driving margin improvements for Palantir, with the adjusted operating margin climbing 11 percentage points year over year in the previous quarter. Anticipating robust double-digit earnings growth, analysts foresee Palantir outperforming expectations due to its expanding revenue pipeline and enhanced margins.
Investors looking to capitalize on the growing AI hardware market can turn to Nvidia, while those aiming to leverage the rising adoption of generative AI software may find Palantir appealing. Despite Palantir’s strong growth prospects, its premium valuation compared to Nvidia raises concerns about potential overvaluation.
Recently, Palantir has experienced a significant pullback, leading analysts to project modest gains of 15% in the coming year. In contrast, Nvidia is anticipated to surge by 51% over the next 12 months due to its attractive valuation and projected earnings growth. This makes Nvidia a more appealing investment option compared to Palantir. Don’t miss out on this potential opportunity to invest in high-performing stocks. Our team of experts occasionally issues “Double Down” stock recommendations for companies on the verge of significant growth. Investing now could lead to impressive returns, as demonstrated by past successes with Nvidia, Apple, and Netflix. Act quickly as these opportunities may not come around again soon.
