Wall Street Analysts Favor Nvidia Over Palantir Technologies

Palantir Technologies (NASDAQ: PLTR) and Nvidia (NASDAQ: NVDA) have become popular choices among retail investors. However, projections from Wall Street suggest limited growth potential for Palantir and significant upside for Nvidia, as outlined below:

• Palantir holds a consensus “hold” rating from 26 analysts, with a median target price of $97 per share, signifying a 7% potential upside from its current price of $91.
• Nvidia boasts a consensus “buy” rating from 67 analysts, with a median target price of $175 per share, indicating an impressive 50% upside from its current price of $117.

Overall, analysts exhibit a more favorable outlook on Nvidia compared to Palantir. Here are key insights for investors.

Where to invest $1,000 right now? Our analyst team has revealed what they consider the 10 best stocks to buy now. Learn More »

Palantir Technologies: Limited Upside Potential

Palantir recently reported strong financial performance in 2024, driven by heightened demand for its AI platform, AIP. Customer count surged by 43% to 711, while existing customers increased spending by 20%. Consequently, full-year revenue climbed 29% to $2.8 billion, up from 17% growth in 2023, and non-GAAP net income rose 64% to $0.41 per diluted share.

The company’s investment case rests on its unique data analytics capabilities. Palantir’s software excels at converting complex data into operational insights, facilitating AI integration more effectively than competing products, according to Chief Revenue Officer Ryan Taylor. He stated, “Our unique capability lies in moving from prototype to production.”

Industry recognition also highlights Palantir’s upward momentum. The International Data Corporation (IDC) recently named Palantir a leader in decision intelligence platforms. Furthermore, Dresner Advisory Services identified the firm as a top vendor in their latest market analysis of AI, data science, and machine learning platforms.

This positions Palantir to leverage significant market opportunities. IDC forecasts AI platform sales will expand at an annual rate of 40%, reaching $153 billion by 2028. However, investors should note that Palantir currently trades at a high valuation of 220 times adjusted earnings. Such a multiple is particularly concerning given Wall Street’s expectation of a 37% earnings increase in 2025, resulting in a price-to-earnings-to-growth (PEG) ratio of 5.9.

While I regard Palantir as a commendable company with considerable potential, no stock is a guaranteed buy at any price. Investors might want to wait for a more opportune entry point or maintain smaller positions until the stock price becomes more attractive.

Image source: Getty Images.

Nvidia: Strong Growth Ahead

Nvidia revealed robust financial results for 2024, driven by soaring demand for its accelerated computing offerings. The company’s full-year revenue skyrocketed 114% to $130 billion, with non-GAAP gross margins increasing by 1.7 percentage points, and adjusted earnings surging 130% to $2.99 per diluted share. CEO Jensen Huang remarked, “Demand for Blackwell is amazing.”

Nvidia’s investment case hinges on its dominance in the data center GPU market, where its chips are crucial for complex tasks such as training large language models and running AI applications. Currently, Nvidia commands around 98% of data center GPU sales and over 90% of AI accelerator sales.

David Harold from Jon Peddie Research noted last year, “Nvidia’s success is largely due to its vertical integration across hardware and software.” This strategy enables the company to provide customers with everything they need in one package, making it easier for clients to choose Nvidia over competitors.

The company’s comprehensive solution for AI computing raises barriers for competitors. According to IDC, AI infrastructure spending is expected to grow 37% annually, reaching $200 billion by 2028. Notably, Nvidia has additional growth opportunities in embedded systems for autonomous vehicles and robotics, along with expansion in AI software. The company estimates its total addressable market exceeds $1 trillion.

Wall Street projects Nvidia’s adjusted earnings to increase by 51% in fiscal 2026, concluding in January 2026. This growth outlook makes the current valuation of 40 times adjusted earnings seem relatively inexpensive. The PEG ratio of 0.78 contrasts sharply with Palantir’s PEG of 5.9, helping clarify why analysts are significantly more optimistic about Nvidia’s prospects.

Is Investing $1,000 in Palantir Technologies Worth It Now?

Before purchasing shares in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks currently available… and Palantir is not included in that list. The selected stocks have the potential to deliver significant returns in the coming years.

For instance, Nvidia was featured on this list on April 15, 2005. If you invested $1,000 then, your investment would be worth $721,394 today!*

Stock Advisor provides a structured approach for investors, offering portfolio-building guidance, ongoing analyst updates, and two new Stock picks every month. The service has outperformed the S&P 500 by more than four times since 2002*. Don’t miss the latest top 10 list, available upon joining Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 18, 2025

Trevor Jennewine holds positions in both Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.