PLTR
Palantir
-- 76.070 NVDA
NVIDIA
-- 134.250 MSTR
MicroStrategy
-- 408.670 SMCI
Super Micro Computer
-- 36.450 TSLA
Tesla
-- 436.230 
The reason why Nvidia is a good stock to buy over Palantir in 2025, Keith Speights, Motley Fool December 12, 2024 (Thursday) 7:37 p.m.
There is no doubt that which artificial intelligence (AI) stock will be the biggest winner in 2024. Despite being on a trajectory to bring in over 180% profit, it's not Nvidia (NASDAQ: NVDA). Instead, Palantir Technologies (NASDAQ: PLTR) has positioned itself to take the crown in AI with a stock price surge of over 330% this year.
However, is Palantir a better choice going forward? I do not think so. The reason why Nvidia is a better stock to buy than Palantir in 2025 is here.
When it comes to growth, it's in a different league.
The growth story of Palantir is very good. In the company's third quarter update, CEO Alexander Karp boasted, "Driven by relentless AI demand that shows no signs of slowing down, we have completely outperformed this quarter." Revenue for Palantir increased by 30% compared to the previous year due to the AI demand referenced by Karp. Adjusted earnings per share surged by 43%.
In November, Karp wrote to shareholders, "This is just the beginning." He noted that the growth of Palantir is "accelerating." With Donald Trump securing a second term in the White House, investors are excited about the company counting the US government as its biggest customer.
How about Nvidia? The GPU manufacturer reported a revenue growth of 94% year-over-year, more than three times that of Palantir. Nvidia's adjusted earnings per share skyrocketed by 103% compared to the previous year.
Importantly, these figures do not even reflect a penny of revenue from the sales of GPUs based on Nvidia's new Blackwell architecture. CEO Jensen Huang believes Blackwell could be the most successful product yet for his company. He even thinks it could be the most successful product for the entire computing industry. Nvidia is already working on more new products each year after Blackwell. Palantir and Nvidia claim to be in different leagues regarding growth.
There are no contests regarding evaluations.
Even if the growth prospects are not as promising, can one stock be a better choice than others? Yes, if the first stock is more attractively valued based on growth prospects than the second stock. However, this is not the case for Palantir versus Nvidia.
Palantir's stocks are trading at 161 times futures earnings. According to LSEG, a financial market infrastructure and data provider, the price-to-earnings-to-growth (PEG) ratio based on 5-year revenue growth forecast is 3.34.
Based on these valuation indicators, Nvidia appears very cheap in comparison. Nvidia's forward earnings multiple is 33.4. Its PEG ratio is 0.89. There is simply no competition in terms of valuation between these two stocks. Nvidia is the clear winner.
However, is Palantir a better choice going forward? I do not think so. The reason why Nvidia is a better stock to buy than Palantir in 2025 is here.
When it comes to growth, it's in a different league.
The growth story of Palantir is very good. In the company's third quarter update, CEO Alexander Karp boasted, "Driven by relentless AI demand that shows no signs of slowing down, we have completely outperformed this quarter." Revenue for Palantir increased by 30% compared to the previous year due to the AI demand referenced by Karp. Adjusted earnings per share surged by 43%.
In November, Karp wrote to shareholders, "This is just the beginning." He noted that the growth of Palantir is "accelerating." With Donald Trump securing a second term in the White House, investors are excited about the company counting the US government as its biggest customer.
How about Nvidia? The GPU manufacturer reported a revenue growth of 94% year-over-year, more than three times that of Palantir. Nvidia's adjusted earnings per share skyrocketed by 103% compared to the previous year.
Importantly, these figures do not even reflect a penny of revenue from the sales of GPUs based on Nvidia's new Blackwell architecture. CEO Jensen Huang believes Blackwell could be the most successful product yet for his company. He even thinks it could be the most successful product for the entire computing industry. Nvidia is already working on more new products each year after Blackwell. Palantir and Nvidia claim to be in different leagues regarding growth.
There are no contests regarding evaluations.
Even if the growth prospects are not as promising, can one stock be a better choice than others? Yes, if the first stock is more attractively valued based on growth prospects than the second stock. However, this is not the case for Palantir versus Nvidia.
Palantir's stocks are trading at 161 times futures earnings. According to LSEG, a financial market infrastructure and data provider, the price-to-earnings-to-growth (PEG) ratio based on 5-year revenue growth forecast is 3.34.
Based on these valuation indicators, Nvidia appears very cheap in comparison. Nvidia's forward earnings multiple is 33.4. Its PEG ratio is 0.89. There is simply no competition in terms of valuation between these two stocks. Nvidia is the clear winner.
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