PLTR vs. ARM: Which AI-Tech Stock is the Better Buy Now?

Palantir Technologies PLTR and Arm Holdings ARM are both deeply aligned with the same powerful theme: the accelerating global adoption of artificial intelligence. Each plays a foundational role in enabling AI at scale.

Palantir supports AI deployment through sophisticated data integration, analytics and decision-making platforms that help organizations operationalize complex data. ARM underpins AI progress at the hardware level by licensing energy-efficient processor architectures that power AI workloads across mobile devices, cloud infrastructure and data centers. While their offerings differ, both companies occupy critical points in the AI value chain, directly benefiting from the rising demand for intelligent, scalable computing solutions from enterprises, governments and consumers.

The Case for PLTR

Palantir has strategically positioned itself to capitalize on the changing dynamics of the AI economy.

At the core of Palantir’s strategy is its Artificial Intelligence Platform, which enables businesses to structure and organize their data, whether financial, supply chain, operational or HR-related, so that AI can process and execute tasks more effectively. By leveraging an ontology-driven approach, Palantir creates digital representations of entire enterprises, allowing AI to interact seamlessly with business operations. Unlike companies that contribute to the oversupply of AI models, Palantir is actively shaping the demand side of the AI economy, positioning itself as a key player in the adoption of enterprise AI.

Palantir’s financial health further reinforces its investment appeal. As of Sept. 30, 2025, the company held $6.4 billion in cash and equivalents, with zero debt, providing ample liquidity to invest in growth initiatives.

Moreover, Palantir’s recent financial performance underscores its strength. In the third quarter of 2025, revenues surged 63% year over year, with U.S. revenues increasing 77% year over year and U.S. commercial business experiencing 121% growth. The company closed 204 deals of at least $1 million, 91 deals of at least $5 million and 53 deals of at least $10 million in the quarter.

The company achieved its highest-ever adjusted operating margin of 51%, reflecting the scalability of its software business model and disciplined cost control. GAAP operating income reached $393 million, while GAAP net income came in at $476 million, translating to GAAP EPS of 18 cents and adjusted EPS of 21 cents, which increased 110% year over year.

The Case for ARM

Arm Holdings’ foundational advantage in power-efficient chip architecture continues to anchor its dominance in mobile computing, but its influence extends far beyond smartphones and tablets. Long known for enabling energy-saving designs for Apple (AAPL), Qualcomm (QCOM) and Samsung, Arm is becoming increasingly central as these companies accelerate their focus on artificial intelligence (AI) and the Internet of Things (IoT).

ARM’s unique ability to deliver high performance with minimal power makes its architecture ideal for an era where intelligence is embedded everywhere, from wearables to edge devices and cloud infrastructure. AI models are being deployed across a wide array of consumer and enterprise products, and Arm’s flexible, power-thrifty designs are being adopted to support these new workloads. Apple continues to rely on ARM-based architecture for its M-series chips as it deepens AI integration across its devices. Qualcomm is using ARM designs to drive AI-enhanced smartphones and automotive platforms, while Samsung leverages ARM’s technology across mobile, consumer electronics and its expanding Exynos portfolio targeting AI and IoT applications.

The reliance of these major tech players on Arm Holdings is not only consistent but also strengthening. As Apple, Qualcomm and Samsung scale their AI ambitions and broaden their IoT ecosystems, they depend even more on ARM’s ability to deliver power-efficient performance at global scale. The company’s ongoing push to optimize its architecture for machine learning and edge computing ensures tight alignment with the emerging needs of its top customers.

As a result, Arm Holdings is evolving from a mobile-centric enabler to a critical AI and IoT infrastructure layer for the world’s leading device makers, solidifying its strategic importance across the broader technology landscape.

How Do Zacks Estimates Compare for PLTR & ARM?

The Zacks Consensus Estimate for PLTR’s 2025 sales and EPS indicates year-over-year growth of 54% and 78%, respectively. EPS estimates have been trending upward over the past 60 days.

The Zacks Consensus Estimate for ARM’s fiscal 2026 sales and EPS indicates year-over-year growth of 21.5% and 5.5%, respectively. EPS estimates have trended upward over the past 60 days.

ARM’s Valuation More Attractive Than PLTR

While ARM appears attractively valued with a forward 12-month P/E of 52.93X versus its median of 121.35X, suggesting that the stock could be undervalued relative to its historical range, PLTR is trading at a forward 12-month P/E of 177.24X, below its 12-month median of 308.7X.

PLTR Seems a Choice

In the current AI-driven market environment, Palantir stands out as the more compelling choice. While both companies benefit from long-term AI adoption, Palantir is more directly tied to real-world AI execution and enterprise decision-making. Its platforms are already embedded in mission-critical operations across commercial and government sectors, creating durable demand and high switching costs. Palantir’s focus on operational AI positions it on the front lines of adoption rather than infrastructure dependency. With stronger momentum, clearer AI monetization and a Buy rating compared with Arm’s Hold stance, Palantir offers greater upside for investors seeking exposure to AI as a transformative business force rather than a supporting technology layer.

While PLTR currently carries a Zacks Rank #2 (Buy), ARM has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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