Two AI Stocks Poised to Become $1 Trillion Giants

Palantir Technologies and two other AI companies have the potential to become $1 trillion giants, driven by their unique value proposition and stellar profitability. Palantir has reported accelerating revenue growth and high net income and free cash flow margins. CEO Alex Karp aims to grow revenue by 10x, which would bring annual revenue to over $40 billion.

Two AI-focused companies, Palantir Technologies and Advanced Micro Devices, are poised to become $1 trillion giants, driven by their unique value propositions and robust financial performances. According to recent reports, both companies are well-positioned to capitalize on the growing demand for artificial intelligence (AI) technology.

Palantir Technologies (NASDAQ: PLTR) has seen significant growth in its revenue and profitability. The company reported a 48% year-over-year (YoY) increase in revenue during the second quarter, compared to 27% in the year-ago quarter 2 Artificial Intelligence (AI) Stocks That Could Become $1 ...^[1]. Moreover, its net income margin was an impressive 33% in Q2, with an adjusted free cash flow margin of 57%. These margins are driven by high prices charged to customers, with some enterprises realizing substantial cost savings. CEO Alex Karp aims to grow revenue by 10x, bringing annual revenue to over $40 billion, which could equate to $20 billion in annual free cash flow over the long term. Applying a high-growth multiple of 50 to this figure would put the stock's market cap at $1 trillion.

Advanced Micro Devices (NASDAQ: AMD), the second-leading supplier of graphics processing units (GPUs), is also well-positioned to benefit from the AI boom. As AI proliferates across the economy, edge computing and AI inferencing are expected to grow significantly. AMD's chips are aimed at running AI devices and PCs, positioning it to benefit from a market estimated to be worth $327 billion by 2033. The company's data center business is expected to accelerate once it launches its Instinct MI350 series of GPUs. Analysts predict AMD's earnings to grow at an annualized rate of 30% over the next several years, with the stock trading at a reasonable forward price-to-earnings multiple of 40. This growth potential could triple the stock in five years, bringing it within striking distance of a $1 trillion market cap within the next decade 2 Artificial Intelligence (AI) Stocks That Could Become $1 ...^[1].

While both companies have the potential to reach $1 trillion market caps, investors should be cautious about the near-term volatility and high multiples of sales and earnings. Additionally, the AI market is highly competitive, with other companies like Nvidia also vying for market share. However, the unique value propositions and strong financial performances of Palantir and AMD make them compelling investment opportunities for those willing to take on the risk.