Palantir Stock vs. Nvidia Stock: Wall Street Says Buy One Before It Soars 50%

Palantir Technologies (NASDAQ: PLTR) and Nvidia (NASDAQ: NVDA) are two of the most widely held stocks among retail investors. But Wall Street anticipates minimal upside in the former and substantial upside in the latter, as detailed below:

• Palantir has a consensus "hold" rating among the 26 analysts who follow the company. The median target price of $97 per share implies 7% upside from its current share price of $91.
• Nvidia has a consensus "buy" rating among the 67 analysts who follow the company. The median target price of $175 per share implies 50% upside from its current share price of $117.

In short, most Wall Street analysts are much more bullish on Nvidia than on Palantir. Here is what investors should know.

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Palantir Technologies: 7% implied upside

Palantir reported solid financial results in 2024 amid strong demand for its artificial intelligence (AI) platform, a product called AIP. Customers increased 43% to 711, while the average existing customer spent 20% more. In turn, full-year revenue increased 29% to $2.8 billion, an acceleration from 17% in 2023, and non-GAAP (generally accepted accounting principles) net income soared 64% to $0.41 per diluted share.

The investment thesis for Palantir centers on its differentiated data analytics platforms. Its software not only helps businesses make sense of complex information but can also more effectively operationalize AI than other products on the market, according to Chief Revenue Officer Ryan Taylor. "Our unique capability lies in moving from prototype to production," he told analysts last year.

Industry observers have taken note of the company's momentum. The International Data Corporation (IDC) recently ranked Palantir as a leader in decision intelligence platforms. And Dresner Advisory Services listed the company as a leading vendor in its latest market study on AI, data science, and machine learning platforms.

That puts Palantir in front of a large opportunity. IDC estimates AI platform sales will increase by 40% annually to reach $153 billion in 2028. But investors should be aware that Palantir stock trades at a very expensive valuation of 220 times adjusted earnings. That multiple is particularly concerning because Wall Street expects earnings to increase 37% in 2025. Those numbers give a price-to-earnings-to-growth (PEG) ratio of 5.9.

Personally, I think Palantir is an excellent company with a bright future. But not even the best stock is worth buying at any price. Investors should ideally wait for a better entry point before buying shares or else keep their positions very small until the price falls to a more reasonable level.

Image source: Getty Images.

Nvidia: 50% implied upside

Nvidia reported impressive financial results in 2024 as demand for accelerated computing products continued to increase. Full-year revenue soared 114% to $130 billion, non-GAAP gross margin expanded 1.7 percentage points, and adjusted earnings increased 130% to $2.99 per diluted share. CEO Jensen Huang also said, "Demand for Blackwell is amazing."

The investment thesis for Nvidia centers on its market leadership in data center graphics processing units (GPUs), chips commonly used to accelerate complicated workloads like training large language models and running AI applications. Nvidia accounts for about 98% of data center GPU sales and more than 90% of AI accelerator sales.

David Harold at Jon Peddie Research wrote last year, "One key aspect of Nvidia's success lies in its vertical integration across hardware and software." By that, he means Nvidia supplements its GPUs with interconnects, networking equipment, and central processing units (CPUs) and provides a robust software development platform known as CUDA. It's always easier to buy from a single company than from multiple vendors.

In short, Nvidia offers a relatively comprehensive solution for AI computing, which makes competing with the company exceedingly difficult. IDC estimates AI infrastructure spending will increase by 37% annually to reach $200 billion by 2028. But Nvidia also has opportunities in embedded systems for autonomous cars and robots, as well as AI software. The company estimates its total addressable market at more than $1 trillion.

Wall Street estimates Nvidia's adjusted earnings will increase 51% in fiscal 2026, which ends in January 2026. That makes the current valuation of 40 times adjusted earnings look rather cheap. Those numbers give a PEG ratio of 0.78. Remember, using the same methodology, Palantir has a PEG ratio of 5.9. Given that discrepancy, it is unsurprising that Wall Street analysts tend to be much more bullish on Nvidia.

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Trevor Jennewine has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.