Palantir Technologies’ (NYSE: PLTR) and Snowflake’s (NYSE: SNOW) divergent trajectories in 2024 post their recent quarterly performances have set the financial world abuzz.
The meteoric rise in Palantir Technologies’ stock value was propelled by the company’s dominant role in the AI software domain. Conversely, Snowflake faced a dramatic plummet as its quarterly results couldn’t buttress a promising outlook.
But, is Palantir now the more enticing investment, given the AI wave? Or could Snowflake’s recent decline present a strategic opportunity for investors, considering its potential in the AI data sector? Let’s delve into the details.
The Rise of Palantir Technologies
Palantir Technologies has surged by a remarkable 37% in 2024, fueled by the expanding adoption of its AI software platform among commercial and governmental clients. The company’s management anticipates an accelerated growth trajectory this year.
Ending 2023 with a 17% revenue increase to $2.23 billion, Palantir projects 2024 revenues of $2.66 billion. However, with its swift customer acquisition pace and recent government contract wins, the firm may surpass these estimates.
Palantir’s proactive approach, such as hosting bootcamps that educate clients on leveraging AI for operational enhancements, has fueled deal closures. Notably, the company doubled its U.S. commercial clients with contracts valued at $1 million+, signaling robust growth potential.
With the AI software market set to catapult from $1.5 billion (2022) to $59 billion (2027), as per Bloomberg Intelligence, Palantir’s AI-driven growth is just revving up. Consensus estimates predict an acceleration in the company’s revenue growth in the coming years.
The Snowflake Story
Snowflake’s consolidated data platform saw stellar revenue growth of 38% to $2.67 billion in fiscal 2024 (ending Jan. 31, 2024). However, its tempered fiscal 2025 product revenue forecast of $3.25 billion suggests a 22% growth rate.
Investors exhibited jitters due to this forecast. Nevertheless, Snowflake’s strategic caution with guidance hints at stronger growth potential in fiscal 2025, especially within the AI domain.
Snowflake’s AI platform, Cortex, democratizes AI application development for users of all proficiencies by offering industry-leading models and AI functionalities that enrich data utilization. Notably, the company plans a $50 million GPU investment to boost its AI capabilities, targeting the burgeoning AI-as-a-service market poised to skyrocket to $179 billion by 2032, per Imarc.
Moreover, Snowflake’s robust revenue pipeline, evidenced by a 41% hike in remaining performance obligations to $5.2 billion, signals sustained growth. Focusing on enhancing AI-centric offerings could further fortify Snowflake’s revenue trajectory.
The Verdict: Palantir or Snowflake?
While Snowflake outpaced Palantir’s growth in the previous year, the spotlight is now on whether it can replicate this feat in 2024. Palantir’s AI traction versus Snowflake’s awaited Cortex platform launch offers an intriguing investment dichotomy.
Though Palantir’s valuation, trading at a steep 24 times sales, appears heady, Snowflake seems more appealing with a relatively mild price-to-sales ratio of 18, even more so in terms of forward sales multiples.
This renders Snowflake’s recent pullback a prospective opportunity, especially given its expansive customer base of over 9,400 for cross-selling AI products. Investors cautious of Palantir’s lofty valuation post its surge may find Snowflake a compelling long-term AI investment.
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Harsh Chauhan has no position in any stocks mentioned. The Motley Fool holds positions in and recommends Palantir Technologies and Snowflake, with a stringent disclosure policy.
The expressed views herein are those of the author and not necessarily representative of Nasdaq, Inc.
