Palantir vs. AMD: Which AI Stock Offers Better Long-Term Value Post-Earnings

The AI revolution is reshaping industries, but not all stocks are created equal. Palantir Technologies (PLTR) and Advanced Micro Devices (AMD) have both captured investor attention with their ties to artificial intelligence, yet their post-earnings trajectories and valuations tell divergent stories. This analysis evaluates which company offers a more compelling long-term investment opportunity by dissecting their financial metrics, growth sustainability, and strategic positioning in the AI ecosystem.

Valuation: Palantir's Premium vs. AMD's Pragmatism

Palantir's Q2 2025 earnings report was a standout, with revenue surging 48% year-over-year to $1.01 billion and EPS of $0.16 beating estimates by 14%. The company's Rule of 40 score—a metric combining growth and profitability—hit 94, and its adjusted free cash flow margin reached 57%. However, these numbers mask a critical issue: valuation disconnect.

Palantir trades at a P/E ratio of 74 times 2026 estimated revenue, a multiple that analysts argue is unsustainable unless the company achieves a 55% compound annual growth rate (CAGR) over four years. Even under such a bullish scenario, the stock would need to trade at just 25 times 2028 revenue to justify its current price. This stark gap between growth and valuation suggests a speculative bubble, driven by retail investor enthusiasm and the allure of its government contracts.

In contrast, AMD's valuation appears more grounded. The chipmaker reported Q2 revenue of $7.7 billion, a 32% YoY increase, despite a $800 million inventory charge from U.S. export restrictions on its MI308 GPU. Its forward P/E ratio of 44.44 and EV/EBITDA of 49.71 are elevated but align with industry norms for high-growth tech firms. AMD's P/S ratio of 9.53 reflects strong demand for its AI chips, particularly the MI355X, which is already in volume production and outperforming NVIDIA's GB200 in token-per-dollar efficiency.

Growth Sustainability: Palantir's Hype vs. AMD's Execution

Palantir's growth is fueled by its dominance in U.S. government contracts, including a $10 billion deal with the U.S. Army. Its U.S. government revenue grew 53% YoY to $426 million, while commercial revenue surged 93% to $306 million. However, this growth is largely driven by one-off contracts and political tailwinds, such as President Trump's government efficiency initiatives. Sustaining such momentum without a diversified revenue stream or recurring business model is a risk.

AMD, meanwhile, is building a self-sustaining AI ecosystem. The company's next-gen MI355X GPU is already powering Oracle's 27,000-node AI cluster, and its MI400 series—launching in FY 2026—is designed for real-time inference and large-scale model training. Strategic partnerships with Microsoft, Meta, and Tesla are expanding its footprint in cloud and enterprise AI. Even with export restrictions limiting China sales, AMD is pivoting to the EU and India, where AI infrastructure demand is surging.

Sector Positioning: Palantir's Niche vs. AMD's Infrastructure Play

Palantir's core offering—data analytics platforms for government and commercial clients—positions it as a “software-as-a-service” (SaaS) company. While its Rule of 40 score is impressive, its business model lacks the hardware-driven scalability of semiconductor firms like AMD. The AI sector is increasingly dominated by companies that provide the physical infrastructure (chips, GPUs) enabling AI workloads, a space where AMD is a clear leader.

AMD's Helios rack-scale AI platform, which integrates MI400 GPUs and EPYC CPUs, is designed to compete with NVIDIA's full-stack solutions. With each Helios rack capable of connecting 72 GPUs as a single accelerator, AMD is targeting the most demanding AI training and inference clusters. Its ROCm 7 stack and support for frontier models like Llama 4 further solidify its developer ecosystem.

Palantir, by contrast, operates in a more fragmented market. While its data platforms are valuable for specific use cases (e.g., defense analytics), they lack the universal applicability of AI chips. The company's reliance on government contracts also exposes it to political and budgetary risks, unlike AMD's diversified client base.

Post-Earnings Performance: A Tale of Two Reactions

After Q2 earnings, Palantir's stock surged 4.14% in after-hours trading, closing at $158.71. This reaction reflects investor optimism about its guidance and government wins. However, AMD's stock fell 1.94% despite beating revenue estimates, as the MI308 export issue and inventory charge weighed on sentiment.

The divergence highlights a key difference: Palantir's stock is driven by narrative, while AMD's performance is tied to tangible metrics. Palantir's valuation hinges on continued growth and market hype, whereas AMD's stock is more resilient to short-term volatility due to its strong cash flow and product roadmap.

Historical backtesting from 2022 to the present reveals that both stocks have historically seen positive returns following earnings releases, with PLTR achieving a maximum return of 12.36% and AMD reaching 11%. These results align with broader market trends of positive post-earnings reactions, though the impact on both stocks has been relatively modest compared to other companies. For PLTR, this aligns with its narrative-driven momentum, while AMD's mixed short-term performance contrasts with its historically positive post-earnings trajectory, underscoring the influence of company-specific factors like export restrictions.

Investment Implications

For long-term investors, AMD offers a more balanced risk-reward profile. Its valuation, while high, is supported by real-world demand for AI infrastructure and a clear path to innovation (MI400, Helios). Palantir, while a high-growth story, is overvalued relative to its fundamentals and faces a steep uphill to justify its current price.

Conclusion: AMD's strategic focus on AI hardware, robust partnerships, and sustainable growth metrics make it a superior long-term bet in the AI sector. Palantir, though compelling in the short term, carries significant valuation risks that could lead to a correction. As the AI landscape evolves, investors should prioritize companies with durable infrastructure and scalable innovation—qualities that AMD embodies more consistently than Palantir.