Palantir vs. Alphabet (Google): Wall Street Is Split on One but Strongly Recommends Buying the Other

Both Palantir Technologies (NASDAQ: PLTR) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) plan to capitalize on the artificial intelligence revolution, and already have to a certain extent. But their stocks have been on very different paths this year. Palantir ripped close to 90% and looks invincible, while Alphabet slumped along with some of the other tech giants in the "Magnificent Seven" and is down 9% this year. Based on recent research reports, Wall Street is split on one of these stocks but rates the other as a strong buy.

Palantir: The AI play the market can't get enough of

Palantir wowed investors with its artificial intelligence platforms that can gather, organize, and analyze data in ways never imagined. The company started by mainly catering to various departments of the U.S. government.

Image source: Getty Images.

Palantir's Gotham platform has been used by the government in its counter-terrorism efforts. Gotham can pull in data from different sources and find hidden trends or insights from that data. Gotham can also help people plan and analyze potential responses to events, allowing them to weigh the pros and cons of big moves or actions. Palantir's platform is easy for people to use even if they aren't familiar AI language models.

Palantir has also shown that it can help companies better organize and use their data to find insights that will help them better run their business. The company's Foundry platform enables companies to compile and organize their data all in one place. Foundry helps businesses track how certain data projects are built, which makes it easier for others to replicate, maintain, and update the projects, while also allowing management to quickly test new ideas.

Many investors are convinced Palantir has a long runway ahead, but the difficult part about the stock is its enormous valuation of 247 times forward earnings, which seems to have left Wall Street analysts split. Of the 17 analysts that issued research reports over the last three months, three say to buy the stock, 11 say hold, and four say sell, according to TipRanks.

It makes sense why Wall Street analysts are torn. Palantir's AI platforms are clearly resonating but all stocks have their limits. As the valuation grows, the margin for error gets slimmer. That's why I'm still on the sidelines here. Interested investors still on board with the stock should consider dollar-cost averaging.

Alphabet (Google): A tech giant trading cheap

Considering how well known Alphabet's subsidiaries are, it's hard to imagine that the stock is on sale. But trading under 18 times forward earnings, that's considered a value price for a company that owns Google and YouTube, along with many other notable businesses.

Alphabet ran into several challenges more recently, most notably around the company's search business, which generated 56% of total revenue in the first quarter of 2025. A federal judge ruled that Google illegally monopolized the digital advertising space, a decision that Alphabet is appealing. It's possible that the judge could order Alphabet to spin Chrome off as its own company. Google's search business is also facing challenges from artificial intelligence chatbots like ChatGPT and Perplexity that many consider more effective at finding information.

Still, investors should keep in mind that Alphabet has many strong and growing business divisions like YouTube, its cloud business, and its self-driving car business Waymo. Alphabet also makes its own chips, which are used in data centers, a business that some analysts don't think is being reflected in Alphabet's stock price but could be worth hundreds of billions of dollars.

Of the 38 Wall Street analysts that have issued research reports on Alphabet over the last three months, 29 rate the company a buy and nine say hold, according to TipRanks. Obviously, risks remain such as Alphabet having to sell Chrome, although I think many experts view that as an unlikely outcome. My biggest concern is ultimately how AI chatbots continue to cut into broader search across the internet. A decline in ad-buying due to tariffs or a potential recession could also hurt earnings.

However, Google's AI overviews, which are generated by the company's large language model Gemini, are reportedly making progress and picking up traction. The company's diversity of strong businesses with growth potential should offset some of the concerns about search. Investors can buy Alphabet, despite some broader challenges, because the lower valuation should already reflect many of these concerns.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Palantir Technologies. The Motley Fool has a disclosure policy.