AI Stocks: Ignore Palantir, Buy These 3 Instead

Palantir Technologies is a great AI company, but its valuation is pricey. Alphabet is being underestimated in the AI race and is investing heavily in AI to become a big winner. Amazon and Meta Platforms are also investing heavily in AI. Investors may want to consider these companies over Palantir due to their lower valuations and potential for growth. Alphabet's AI-powered Search Mode has been well-received by users, and the company has a major leg up in monetizing AI through its ad network.

Palantir Technologies (NASDAQ: PLTR) is a leading player in the artificial intelligence (AI) sector, known for its Artificial Intelligence Platform (AIP) that gathers data from various sources and links it to real-world assets and processes. However, its valuation is considered pricey, with a forward price-to-sales (P/S) multiple of over 91 times 2025 analyst revenue estimates [1]. Despite its impressive execution, the high valuation makes it susceptible to market fluctuations.

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has been investing heavily in AI, with a total of $85 billion allocated for this year alone. The company's AI-powered Search Mode has been well-received by users, with 82% finding it more useful than traditional search and even preferring it to ChatGPT [2]. Alphabet's ad network provides a significant advantage in monetizing AI, allowing it to keep many tools free while generating revenue through ads.

Amazon (NASDAQ: AMZN) is also investing heavily in AI, integrating it into its logistics, warehouse automation, and delivery operations to improve efficiency and reduce costs. The company's cloud division, Amazon Web Services (AWS), remains the market-share leader, with platforms like Bedrock and SageMaker making it easier for developers to build and run AI models. Amazon's custom-built AI chips help keep costs down, providing a competitive edge as AI workloads increase.

Meta Platforms (NASDAQ: META) is another significant player in the AI space, with CEO Mark Zuckerberg betting big on AI infrastructure and talent. The company plans to spend hundreds of billions of dollars on next-generation AI infrastructure and has been aggressively poaching top AI talent. Meta's AI initiatives have already led to increased user engagement and higher ad prices, with plans to expand ad services to new platforms like WhatsApp and Threads.

Investors may want to consider Alphabet, Amazon, and Meta over Palantir due to their lower valuations and potential for growth. While Palantir is a strong AI company, its high valuation makes it more susceptible to market fluctuations. Alphabet, Amazon, and Meta, on the other hand, offer compelling growth prospects and are well-positioned to capitalize on the AI revolution.

References:
[1] https://finance.yahoo.com/news/forget-palantir-buy-3-tech-093000849.html
[2] https://finance.yahoo.com/news/google-search-is-readying-the-next-generation-for-ai-morning-brief-100009444.html