Nvidia vs. Palantir: Wall Street Billionaires' Divergent Bets

Nvidia(NVDA 3.10%) and Palantir Technologies(PLTR 3.65%) have recently been two of the hottest stocks on Wall Street, with both companies playing a key role in the artificial intelligence economy. However, hedge fund billionaires like Ken Griffin and David Shaw have made divergent bets on these two stocks, with Griffin's Citadel buying Nvidia and selling Palantir, while Shaw's D.E. Shaw did the opposite. This article will explore the reasons behind these trades and the long-term prospects of these companies.



Nvidia: The Attractive Investment Opportunity

Nvidia reported solid financial results in the third quarter of fiscal 2025, with sales increasing 94% to $35 billion and non-GAAP earnings more than doubling to $0.81 per diluted share. This was the sixth consecutive quarter of triple-digit earnings growth. Wall Street expects Nvidia's adjusted earnings to increase at 39% annually through fiscal 2027, which makes the current valuation of 52 times adjusted earnings look reasonable.

One of the key drivers of Nvidia's growth is its Blackwell GPUs, which deliver up to four times faster AI training and 30 times faster AI inference versus the previous Hopper architecture. The production ramp of Blackwell GPUs began during the fourth quarter of fiscal 2025 and will continue into fiscal 2026. Analysts like Beth Kindig and Dan Ives believe that Nvidia could crush consensus sales and earnings estimates due to Blackwell sales and adjacent products like networking equipment and software services.



Moreover, Nvidia sees an overlooked $1 trillion opportunity in autonomous driving and robotics, which could further boost its growth prospects. Given these factors, Nvidia shares currently trade at an attractive price, but the stock may look downright cheap in hindsight if earnings increase faster than Wall Street anticipates. Investors with a time horizon of at least three to five years should feel confident buying a small position in Nvidia today.

Palantir: The Highly Valued Stock with Slowing Growth

Palantir reported third-quarter financial results that beat expectations, with revenue increasing 30% to $725 million and non-GAAP net income rising 42% to $0.10 per diluted share. However, the company's growth rate has been slowing, with revenue growth of 30% in the third quarter down from 35% in the second quarter and 40% in the first quarter. This slowing growth rate may indicate that Palantir's rapid expansion is coming to an end.

Palantir's high valuation is another concern, with the stock trading at 205 times adjusted earnings. This multiple is absurd for a company whose earnings are expected to grow at 25% annually through 2027. Investors who chase Palantir right now could wind up in trouble, as the valuation will fall at some point, either due to faster earnings growth or a stock correction.



Conclusion

Nvidia offers a more attractive investment opportunity for long-term investors due to its higher expected earnings growth rate and more reasonable valuation compared to Palantir. Nvidia's strong earnings growth prospects and attractive valuation make it a compelling choice for investors with a time horizon of at least three to five years. While Palantir has reported impressive financial results, its high valuation, slowing growth, and regulatory risks make it a less attractive investment opportunity. Investors should consider the factors discussed in this article when making investment decisions and consult with a financial advisor before making any trades.