Nvidia vs. Palantir: Choosing the Better Growth Stock for Today's Market

Nvidia and Palantir are two tech companies that have benefited from the AI hype. Nvidia produces GPUs that power data centers and is expected to capture up to 70% of the anticipated $3 trillion to $4 trillion in AI infrastructure spending over the next five years. Palantir uses AI to turn data into actionable insights and has grown its revenue by over 810% since the beginning of 2024, with its U.S. commercial segment growing 93% year over year. Both companies have produced generational returns, but Nvidia's focus on data centers and Palantir's diversified revenue base make them both attractive growth stocks to own today.

Nvidia and Palantir are two tech companies that have significantly benefited from the AI hype, with both experiencing substantial growth and market recognition. Nvidia, a leading producer of graphics processing units (GPUs) that power data centers, reported a robust Q1 2025 with $46.7 billion in revenue, a 56% year-over-year (YoY) increase driven by surging AI demand [1]. CEO Jensen Huang predicted that global AI infrastructure spending could reach $3 to $4 trillion in the next five years, with Nvidia aiming to capture up to 70% of this spending [2].

Palantir, a software company that uses AI to turn vast amounts of data into actionable insights, has seen its revenue grow by over 810% since the beginning of 2024. Its U.S. commercial segment grew 93% year over year in the second quarter, contributing to its first billion-dollar quarter [3]. Both companies have produced generational returns, but their unique strengths and potential vulnerabilities make them distinct growth opportunities.

Nvidia's focus on data centers and AI infrastructure gives it a strong competitive position. Its data center segment accounted for 88% of total revenue in Q1 2025, underscoring the growing importance of AI infrastructure in the tech landscape [1]. However, the company faces challenges, such as a volatile relationship between the U.S. and China, which could impact its revenue [2].

Palantir, on the other hand, has a diversified revenue base, with its U.S. commercial segment growing rapidly. While it is not as critical to the AI ecosystem as Nvidia, its AI Platform (AIP) has fueled its commercial success and long-term appeal [3]. However, Palantir's reliance on U.S. government contracts poses a risk, as these contracts can be subject to changing government budgets and political priorities.

When considering which company is the better investment, it is essential to look at their valuations. As of Aug. 28, Nvidia is trading at 41 times its forward earnings, while Palantir is trading at 242 times its forward earnings [3]. Nvidia's valuation is expensive by most standards, but Palantir's valuation is one of the highest in history, making it more susceptible to market corrections.

In conclusion, both Nvidia and Palantir are attractive growth stocks in the AI space. Nvidia's focus on data centers and AI infrastructure positions it well for the anticipated AI boom, while Palantir's diversified revenue base and commercial success make it a strong contender. However, investors should consider the companies' valuations and potential risks when making their investment decisions.

References:
[1] NVIDIA Announces Financial Results for Second Quarter [https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-second-quarter-fiscal-2026]
[2] 5 Biggest Takeaways From the Nvidia Q2 Earnings Call [https://www.businessinsider.com/biggest-takeaways-from-the-nvidia-second-quarter-earnings-call-2025-8]
[3] Nvidia (NVDA) Earnings Report Q2 2026 [https://www.cnbc.com/2025/08/27/nvidia-nvda-earnings-report-q2-2026.html]