Nvidia vs. Palantir: The Better Growth Stock to Own Today

The artificial intelligence revolution has created two distinct paths to growth: foundational infrastructure and enterprise implementation. In 2025, Nvidia and Palantir stand at opposite ends of this spectrum, each leveraging AI's momentum in unique ways. While Nvidia dominates the hardware and software layer that powers AI models, Palantir focuses on integrating AI into enterprise workflows. But which stock offers a stronger long-term value proposition?

Nvidia: The Infrastructure King

Nvidia's ascent as the “GPU king” has been nothing short of meteoric. In Q2 2025, the company reported $46.7 billion in revenue, a 56% year-over-year surge, driven by its data center segment. This segment now accounts for 88% of total revenue, with Blackwell GPUs—offering a 30x performance leap over prior generations—securing a 98% market share in data center GPUs. The company's financials are equally compelling: 72% gross margins, over 50% operating margins, and a $60 billion share repurchase program underscore its scalability and confidence in future demand.

Nvidia's strategic positioning is critical. As AI models grow to trillions of parameters, the demand for high-performance computing (HPC) infrastructure will only intensify. The company's ecosystem—comprising hardware, software (e.g., CUDA), and partnerships with cloud providers—creates a moat that is difficult to replicate. Its $3.4 trillion market cap is justified by a forward P/E in the low 20s, implying a 43% earnings-per-share growth rate for fiscal 2026.

Palantir: The Enterprise AI Integrator

Palantir's growth story is rooted in its ability to operationalize AI for enterprises. The company's Artificial Intelligence Platform (AIP) has driven a 93% year-over-year revenue increase in its U.S. commercial segment, reaching $306 million in Q2 2025. Total contract value for this segment surged 222% to $843 million, while remaining performance obligation (RPO) hit $2.42 billion. These figures highlight strong demand for Palantir's “private AI” solutions, which help organizations like the Cleveland Clinic reduce costs and improve efficiency.

However, Palantir's business model is more fragile. The U.S. government accounts for 42% of its revenue, exposing it to budget cycles and political shifts. Meanwhile, cloud giants like AWS and Microsoft are encroaching on its enterprise AI niche, offering integrated AI tools that could undercut Palantir's value proposition. The company's valuation—250 times forward earnings—reflects high expectations, but its stock has underperformed sector peers amid rising competition and macroeconomic uncertainty.

Strategic Positioning and Risks

Nvidia's infrastructure-centric model benefits from network effects. The more developers and enterprises rely on its GPUs and software, the harder it becomes for competitors to displace it. Its gross and operating margins remain robust, and its R&D pipeline (e.g., B30A chip) ensures long-term relevance. In contrast, Palantir's growth depends on deep customer integration, a model that is less scalable and more susceptible to churn.

Valuation is another key differentiator. Nvidia's forward P/E is attractively priced relative to its role in enabling AI innovation, while Palantir's stretched multiples raise concerns about sustainability. Geopolitical risks also loom larger for Palantir, given its reliance on U.S. government contracts, whereas Nvidia's global data center demand provides a more diversified revenue base.

Investment Thesis

For investors seeking durable growth in the AI era, Nvidia is the clearer choice. Its infrastructure dominance, high-margin business model, and critical role in the AI supply chain position it to benefit from decades of innovation. Palantir, while innovative, operates in a more fragmented and competitive space, with a valuation that leaves little room for error.

That said, Palantir's AIP platform has shown strong traction in enterprise markets, and its recent $1 billion revenue milestone (Q2 2025) validates its value proposition. Investors with a higher risk tolerance might consider a small position in Palantir to capitalize on its niche growth, but Nvidia's structural advantages and robust financials make it the superior long-term bet.

In the AI arms race, infrastructure wins. And Nvidia is building the weapons.