Two of the hottest Artificial Intelligence (AI) The actions in 2024 were undoubtedly, Palantant(Nasdaq: PLTr) And Nvidia(Nasdaq: NVDA). However, after having displayed huge gains last year, the two actions are now found to be their heights after the recent withdrawal of the market.
Let’s look at what action is the best investment option for investors at the moment.
Palantir and Nvidia have two very different companies, but the two were large AI winners.
Nvidia is a semiconductor company that manufactures Graphic processing units (GPU). Its tokens have become the backbone of AI infrastructure because of their rapid treatment speeds, which have proven to be ideal for the formation of AI models and management inference. The company has created a large gap via its CUDA software platform, which it developed in 2006 to allow its chips to be scheduled for various purposes. Today, it has been built above this program to have leading libraries and services designed for AI, which makes its chips so desirable.
Palant, on the other hand, is a software analysis company. It initially made a name for itself in the government space, where its data collection and analysis capacities were used for critical tasks such as the fight against terrorism. However, with the advent of its AI platform, it has turned into an AI operating system company which helps customers design and deploy AI solutions for various use cases.
The two companies have experienced strong growth. Nvidia’s revenues have more than doubled each of the last two years, because large technological companies and AI start-ups take place to develop AI infrastructure. Expenses for IA infrastructure continues to increase, led by the three major cloud computing companies, which have designed a plan to spend this year 250 billion in capital (CAPEX) concerning the construction of their AI infrastructure. For its part, Nvidia predicted that the global CAPEX linked to the data center will reach more than 1 dollars Billion by 2028.
Palantir, on the other hand, has experienced accelerated growth while commercial customers flock to its AI platform and the federal government is starting to adopt AI. Overall revenue growth increased by 36%in the last quarter, while US commercial income has increased by 64%, and US government revenues jumped 45%. Its number of customers increased by 43% because the company attracts new commercial customers via its IA bootcamps.
So far, many of its commercial customers are still in the concept proof phase. Thus, Palantir has a great opportunity because he puts the solutions of these customers in production to solve the problems of the real world.
Regarding risks, the most important for Nvidia is a slowdown in IA infrastructure expenses. The company’s CUDA software platform is free, so it does not have a great source of recurring income. Instead, he must sell more and more chips to continue to grow.
Although IA infrastructure expenses are always up, there are concerns that the pace of these expenses will eventually slow down. It has been reported that MicrosoftWho is Nvidia’s greatest customer, has removed certain data center projects, because he thinks there could be an overcapacity of the supply compared to demand. However, TD Cowen analysts noted that Cloud Computing rivals Alphabet And Amazon intervened to complete this capacity.
As long as companies continue to run to build better AI models, they need more computing power, which tends to be supplied by GPUs. In fact, as the models have progressed, they tended to need more IA chips on which to be formed. For example, the new models of the two Meta-platforms And XAI was formed of about 10 times more GPU than their previous versions.
Palantir, on the other hand, faces a potential risk linked to the current budget cuts of the US government, which is its greatest client, representing more than 40% of its income last year. The company is particularly linked to the Ministry of Defense (DOD) and the army expenses. As part of the Government Ministry of Effectiveness (DOGE), the Trump administration asked the DOD to reduce its budget by 8% per year over the next five years.
It is a huge reduction in the DOD budget, which will have an impact on many programs. The quantity or little impact on Palantant or its growth opportunities is still unknown. The CEO of Palantir, Alex Karp, publicly said that he supports Doge and suggested that the company could benefit from it. However, he and other initiates of the company also poured out the stock of palantant. However, it is certainly possible that if the Palabuting AI platform can show that it improves efficiency and helps reduce costs, this could be a Doge winner.
Image source: Getty Images.
One of the major differences between the actions of Nvidia and Palantant is their evaluation. At the time of writing this article, NVIDIA’s actions are fairly cheap, trading actions to a price / profit ratio (P / E) ultimately around 24 times based on this year’s analysts’ estimates, with a price / benefit / growth / growth ratio (PEG) of just over 0.4. Stocks with PEG reports below 1 are generally considered undervalued, making Nvidia a good deal according to this metric.
The palantant stock, on the other hand, is quite expensive. Actions are negotiated with a pricing multiple (P / S) in the long term (P / S), which represents more than double the cutting -edge multiple than software actions as a service (SaaS) have exchanged in 2021 with similar growth rates. Note that with the actions of Nvidia, we examine its evaluation according to the benefits, while with the actions of Palantir, we examine its valuation according to the income, so the difference is quite enormous.
Given their recurring income models, software companies should negotiate with much higher assessments than semiconductor companies. However, the difference in evaluation between the two companies is still quite austere. The two companies have potential growth engines and potential risks. As such, I prefer Nvidia at the moment, which is just the right deal if IA infrastructure expenses continue to grow.
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John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Suzanne Frey, director of Alphabet, is a member of the board of directors of Motley Fool’s. Randi Zuckerberg, former Director of Development of the Facebook and Sister of the CEO of Meta Platforms, Mark Zuckerberg, is a member of the board of directors of Motley Fool’s. Geoffrey Seiler has alphabet positions. The Motley Fool has positions and recommends Alphabet, Amazon, Meta, Microsoft, Nvidia and Palantir technologies. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.
