Both Nvidia (NVDA) and Palantir Technologies (PLTR) performed exceptionally well last year, driven by the growing demand for AI solutions. However, 2025 has brought some challenges for these two growth stocks.
While Nvidia has dropped 14% this year, Palantir also lost momentum after a solid start. Despite the setbacks, both companies continue to capitalize on the increasing need for AI technology. Nvidia specializes in AI hardware, while Palantir focuses on AI software. Both markets are expanding rapidly, but which stock should you consider investing in now?
Nvidia’s Strength in AI Hardware
Nvidia leads the AI hardware market, particularly with its graphics processing units (GPUs). Despite concerns about export restrictions and competition from custom processors, Nvidia’s performance remains strong. In the fourth quarter of fiscal 2025, Nvidia’s revenue surged 78% year over year, reaching a record $39.3 billion. Its earnings also increased by 71%, surpassing Wall Street’s expectations.
Looking ahead, Nvidia projects revenue of $43 billion in the next quarter, marking a 65% increase from the previous year. The company’s new Blackwell processors are crucial to its growth. These processors offer high performance, processing requests 25 times faster at a lower cost compared to previous models. This positions Nvidia to maintain its dominance in the AI chip market, where it holds about 85% of the share.
Palantir’s Growth in AI Software
Palantir Technologies is rapidly expanding in the AI software market. IDC forecasts that the global AI software market could grow from $28 billion in 2023 to $153 billion by 2028. As a leading AI software platform vendor, Palantir stands to benefit significantly from this expansion. In 2024, Palantir’s revenue grew by 29%, up from 17% in 2023.
Palantir’s customer base is expanding at an impressive rate. The company reported a 40% increase in its remaining deal value (RDV) for the fourth quarter of 2024. This indicates that Palantir is signing contracts faster than it can fulfill them. As more customers adopt Palantir’s AI platform, the company expects stronger revenue growth. Additionally, Palantir’s operating margin improved by 11 percentage points year over year, and its earnings per share jumped by 64%.
Which One Should You Buy?
Both Nvidia and Palantir offer unique investment opportunities. Nvidia provides exposure to the AI hardware market, while Palantir focuses on AI software. However, Nvidia’s growth rate is currently faster, and its valuation is lower than Palantir’s. Analysts expect Palantir’s stock to increase by 15% in the next year, while Nvidia’s stock is expected to grow by 51%.
If you’re looking for faster growth, Nvidia is likely the better choice. Its strong earnings potential and lower valuation make it an attractive option. While Palantir’s premium valuation may raise concerns, its growing customer base and improving margins suggest solid long-term performance.
Conclusion: Nvidia vs. Palantir
When comparing Nvidia vs. Palantir, both stocks offer strong potential, but Nvidia’s dominance in the AI hardware space and faster growth rate make it a more compelling option right now. Investors looking for exposure to AI software might still find Palantir an appealing choice, but Nvidia seems poised for greater upside in the near future.
