NVIDIA and Palantir Cool Off in 2026: Concerning?

Several of the notable stocks involved in the broader AI storm haven’t seen great price action over the last several months, a list that includes beloved NVIDIA NVDA and Palantir PLTR.

Below is a chart illustrating the performance of each in 2026, with the S&P 500 also blended in as a benchmark.

Image Source: Zacks Investment Research

Is the fatigue a concerning sign, or just a temporary pause after massive runs?

Palantir Faces Pressure

Palantir’s business continued to perform strongly throughout its latest period, with total sales reaching $1.4 billion, a 70% increase from the year-ago period. U.S. results were likely the biggest highlight, which were supported by both commercial and government strength. Specifically, U.S. sales totaled $1.1 billion, growing 93% year-over-year and 28% sequentially.

In addition, Palantir closed over $4.2 billion in total contract value (TCV), an increase of more than 130% compared to the same period last year. As evidenced by these results, the customer base continues to grow at a red-hot pace, with the overall customer base jumping 34% from the previous year.

Below is a chart illustrating the company’s sales on a quarterly basis. As we can see, the growth has been outstanding, a common theme we’ve been accustomed to from many of the AI winners so far.

Image Source: Zacks Investment Research

The valuation picture here remains rich, though not really surprising given the continued growth expected. Shares currently trade at a 46.7X forward 12-month price-to-sales ratio, reflecting a massive premium relative to the Zacks Computer and Technology sector average of 6.1X. But the growth outlook does help support the rich multiple, with current and next fiscal year sales expected to climb 61% and 40%, respectively.

NVIDIA: A More Conservative Bet?

Concerning NVIDIA earnings, it posted huge growth yet again in its latest release, with adjusted EPS of $1.62 growing 82% year-over-year alongside record sales of $68.1 billion that reflected a 73% growth rate.

Below is a chart illustrating the company’s immense sales growth over recent years.

Image Source: Zacks Investment Research

As alluded to by the overall sales growth rate, Data Center results showed a red-hot demand backdrop. Data Center sales of $62.3 billion reflected a record, up 75% year-over-year and 22% sequentially.

Importantly, shares still remain at much more tolerable valuation levels relative to PLTR. Shares presently trade at a 12.2X forward 12-month price-to-sales ratio, which ranks among the lowest we’ve seen over the past three years. Sales are forecasted to grow 60% in its current fiscal year and 27% in FY28, though these expectations can easily jump given the massive CapEx announcements we’ve seen from the hyperscalers.

Higher-than-expected CapEx forecasts have been a regular theme during the AI buildout, with companies eager to get their hands on the magical GPUs and other related hardware that NVDA provides.

Putting Everything Together

With both companies massive beneficiaries of the AI era, the backdrop for NVIDIA NVDA and Palantir PLTR remains robust, with massive CapEx supporting NVIDIA and tailwinds from defense spending similarly benefiting Palantir.

Both companies are going to continue seeing great growth, and the recent ‘boring’ action we’ve seen within both shouldn’t be overly concerning. Keep in mind that some of the weakness in Palantir has also been fueled by the broader rout we’ve seen in many software stocks, with investors likely cashing in some profits after its tremendous run over the recent year.

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

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