Palantir vs. NVIDIA: Which AI Stock Offers the Better Valuation?

Riding the wave of artificial intelligence (AI)-driven momentum, Palantir Technologies Inc. PLTR and NVIDIA Corporation NVDA delivered strong revenue growth and profitability in their latest quarterly results, cementing their status as two of the most sought-after stocks on Wall Street. But which one is more attractively valued, making it the more compelling option for investors? Let’s take a closer look.  

Reasons to Be Bullish on Palantir 

Palantir’s Artificial Intelligence Platform (AIP) gained significant popularity among both U.S. commercial clients and the government, as it helps in seamlessly integrating AI and large language models across highly complex data infrastructures.  

Strong demand for AIP helped Palantir’s U.S. commercial segment revenue jump 137% year over year and 28% quarter over quarter to $507 million in the fourth quarter of 2025, per investors.palantir.com. Government revenues climbed 66% year over year and 17% sequentially to $570 million in the said period. Total revenues for the quarter were $1.4 billion, up 70% year over year and 19% sequentially. 

Palantir continues to generate profits, reporting GAAP net income of $609 million, which translates to a 43% margin. The company expects steady improvement in GAAP net income throughout 2026. The company also anticipates total revenues to increase to $7.182-$7.198 billion in 2026 from $4.475 billion in 2025. This revenue growth seems attainable, supported by U.S. commercial clients’ remaining deal value reaching $4.38 billion in the fourth quarter of 2025, up 145% year over year and 21% sequentially.  

Palantir generated adjusted free cash flow of $791 million in the fourth quarter of 2025, representing a free cash flow margin of 56%. That exceptionally strong margin provides the company significant flexibility to reduce debt, reinvest in growth and reward shareholders. It’s worth noting that Palantir’s Gotham and Foundry platforms face less competition, supporting more predictable cash flows going forward. 

Reasons to Be Bullish on NVIDIA 

NVIDIA’s latest quarterly results show a record increase in data center revenue, highlighting its dominant role in hyperscale AI infrastructure spending. Driven largely by a shift toward accelerating computing and AI platforms, NVIDIA’s data center revenue for the fourth quarter of fiscal 2026 reached $62.3 billion, marking a 75% increase year over year and a 22% rise sequentially, according to nvidianews.nvidia.com. Overall revenue totaled $68.1 billion, up 73% year over year and 20% quarter over quarter. 

Moreover, demand for NVIDIA’s data center products continues to be robust, and the management remains confident that the company will capitalize on the global AI adoption. NVIDIA expects revenues of $78 billion for first-quarter fiscal 2027, with a plus or minus 2%. Jensen Huang, CEO of NVIDIA, expressed confidence, noting that “enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth.”

NVIDIA is showcasing its ability to maintain strong profitability while managing additional costs. This is because the company posted a non-GAAP gross margin of 75.2% in the fourth quarter of fiscal 2026 and projects margins to stay around 75% in the first quarter of fiscal 2027, even after accounting for stock-based compensation. NVIDIA’s capability to sustain high gross margins reflects its strength in commanding premium prices for AI accelerators and graphics processing units.  

AI Valuation Showdown: Palantir vs. NVIDIA 

Both Palantir and NVIDIA have posted impressive quarterly results, with Palantir’s AI and data platforms driving robust growth, strong profits and predictable future cash streams. NVIDIA maintains dominant growth, strong profitability and premium pricing power in AI and data center markets. 

Thus, at first glance, both stocks may look investment-worthy, but  NVIDIA’s shares are relatively more affordable than Palantir’s, potentially offering investors an edge. In terms of the price/earnings ratio, NVDA trades at 24.68 forward earnings. In comparison, the PLTR’s forward earnings multiple is 108.41.

Image Source: Zacks Investment Research

Therefore, NVIDIA currently presents a more attractive valuation compared to Palantir. For now, both NVIDIA and Palantir have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research