nvidia (NVDA) 1.92%)) and Palantir Technologies (pltr 5.53%)) Last year, stocks in both companies delivered huge profits thanks to the rapidly growing demand for hardware and software solutions focused on artificial intelligence (AI). However, 2025 has proven different in these red-heat growth stocks.
Nvidia’s shares fell nearly 14% in 2025, but Palantir lost many positions in recent days after a solid start to the year. However, there cannot be denied that both companies are on track to profit from the favorable end market. While Nvidia’s recent results suggest that the rapidly growing demand for AI hardware continues to be a key growth driver for the company, Palantir continues to witness improved growth profiles due to the growing need for generating AI software.
However, if I had to buy one of these two AI stocks now, which one should I spend the money? Let’s look into it.
For Nvidia
The market doubts Nvidia’s ability to maintain healthy growth thanks to a variety of reasons, from export controls for AI graphics processing units (GPUs) to potential slowdowns in AI infrastructure spending, to other types of chips, such as custom processors that AI technology giants employ at lower costs for AI, to potential slowdowns from threats.
However, the company’s latest quarter results reveal that demand for AI chips is healthy. Nvidia’s revenue for the fourth quarter of fiscal year 2025 (ends January 26th) rose 78% year-on-year to a record $39.3 billion. Adjusted revenues also rose 71% per share to $0.89. Both numbers were ahead of Wall Street’s expectations.
The guidance shows that Nvidia is on track to maintain a healthy momentum. The current quarter is expected to generate revenue of $43 billion, which is expected to increase by 65% from the previous year. However, Nvidia could surpass its own expectations as it bolsters supply of its latest generation Blackwell processors to support the demand of its rapidly growing customers.
More importantly, Blackwell, thanks to its versatility, can help Nvidia maintain its dominant position in the AI chip market. Management noted in the latest revenue conference call, “Blackwell is working on the entire AI market from inference via the cloud, training from inference to on-premises and enterprises, and pre-training.”
Nvidia further points out that the arrival of low-cost inference models such as Deepseek’s R1 is likely to significantly increase the demand for computing. This portends a good for the company’s Blackwell architecture, which claims Nvidia can process requests 25 times faster at 20 times lower costs compared to previous generation H100 processors. So it’s not surprising to see Nvidia maintaining a dominant share of around 85% in the upcoming AI chip market.
This is probably why analysts have raised expectations for revenue growth for the company in the current and for the next two fiscal years.
YCHARTS estimates NVDA revenue for current fiscal year data
Meanwhile, the company’s revenue is expected to rise 50% this year despite the short-term margin pressures it faces while increasing production of Blackwell processors. Nvidia points out that if Blackwell production increases completely, it will return to the 70% low range to the 70% mid-term range later this year.
So don’t be surprised to see Nvidia’s revenue grow at a faster pace and exceed analysts’ expectations as the year progresses.
For Palantir Technologies
Palantir Technologies is one of the leading vendors of AI software platforms and is a market that is expected to be large in the long term. Market research firm IDC estimates that the global AI software platform market could grow from $28 billion in 2023 to $153 billion, up from $40% per year in 2028.
This fast-growing market has already had a positive impact on Palantir’s performance. The company’s revenue growth accelerated to 29% in 2024 from a 17% increase seen in 2023. Given that Palantir’s top line was just under $2.9 billion last year, we can see that there is still room for future growth, given the potential size of the AI software platform market.
What’s noteworthy here is that the pace at which Palantir is currently signing new contracts is equal to the pace that IDC expects to grow in the AI software platform market. The company reported remaining trading value (RDV) to $5.4 billion in Q4 2024, an increase of 40% year-on-year.
This was a significant improvement over a 22% year-on-year increase in this indicator in the third quarter. Palantir’s RDV refers to the total amount of an unmet contract for a company at the end of the quarter. Therefore, the faster growth of this metric proves that the company is signing contracts at a faster pace than it is fulfilling, paving the way for future revenue and revenue growth.
Thanks to the increased efficiency offered by the Artificial Intelligence Platform (AIP), Palantir’s revenue pipeline could continue to improve in the future as new customers with the company’s onboard tend to ultimately sign larger contracts. Palantir’s overall customer count increased 43% year-on-year in the last quarter. As these customers begin to deploy Palantir’s AIP in more areas, the company will need to witness improvements in RDV.
Additionally, increased spending by existing customers has contributed to improving Palantir’s margins. Adjusted operating margins increased by 11 percentage points year-on-year from the previous quarter. Naturally, Palantir’s adjusted revenues earned an impressive 64% in 2024 at $0.41 per share. Analysts hope that Palantir will maintain strong double-digit revenue growth in the future, but don’t be surprised that these expectations exceeded thanks to their rapid revenue pipeline and margin improvements.
Estimates of PLTREPS for current fiscal year data by YCHARTS
verdict
While NVIDIA can benefit investors from the lucrative AI hardware market, Palantir will enable them to make the most of the rapidly improved adoption of generated AI software. As a result, both companies were able to find locations in a diverse portfolio. But the problem with Palantir is that it trades at a massive premium compared to Nvidia, which is growing at a faster pace.
NVDA PE ratio data by YCHARTS
Palantir’s expensive valuation is one of the reasons why it has recently been heavily pulled back, creating concerns that the stock may have preceded itself. Naturally, analysts expect Palantir to offer just 15% profit next year, following the median price target of $97. Meanwhile, Nvidia is expected to jump 51% over the next 12 months, according to analysts.
That’s not surprising as Nvidia’s cheaper valuation and the faster revenue growth expected to be offered this year can reward the market more conversely compared to Palantir, making it easier for investors to determine that either of these two AI stocks is a better purchase now.
