The stock market has witnessed explosive rallies in AI-driven stocks, and two of the most intriguing names in the space right now are Palantir Technologies (NASDAQ: PLTR) and Super Micro Computer (NASDAQ: SMCI). While both stocks have delivered impressive gains, investors are now wondering which one has the most room to run in 2025. Let’s break down their potential.
Can PLTR Stock Keep Soaring?
Palantir has been on a parabolic run over the past two years, with its stock price surging to new highs. Despite its rich valuation, investors continue to pile in, believing in its long-term AI and government contract-driven growth.
- Financial Performance: PLTR has transformed from an unprofitable company in 2022 to delivering triple-digit profit growth in 2023 and 2024.
- Revenue Projections: Palantir expects revenue in 2025 to reach $3.74 billion to $3.76 billion, representing a 31% year-over-year growth.
- Massive Valuation: The stock trades at 225x forward earnings and 75x forward sales, levels typically reserved for hyper-growth companies.
- High-Risk, High-Reward: The most optimistic price target puts PLTR at $125, while the lowest forecast warns of a drop to $18.
- Potential Catalysts: AI expansion, new government contracts, and a possible stock split could fuel further gains, potentially even pushing it to $200—but that would put it deep in bubble territory.
SMCI Stock: Undervalued AI Giant?
Super Micro Computer, unlike Palantir, has been a value play in the AI revolution. Though it faced accounting concerns in early 2024, those fears are easing, and the stock has rebounded strongly.
- Financial Strength: SMCI expects 54% year-over-year sales growth for Q2 FY2025.
- Future Projections: The company estimates $22.5 billion to $25 billion in revenue for FY2025 and up to $40 billion in FY2026.
- Cheap Valuation: Trading at 21x forward earnings and 1.4x forward sales, SMCI is significantly cheaper than most AI and cloud computing stocks.
- Analyst Targets: The highest forecast values SMCI at $135, while the lowest stands at $28.
- Market Sentiment: Investors are regaining confidence, and if SMCI continues executing its strategy, its stock could climb much higher.
Which AI Stock is the Better Buy?
Palantir is riding high on AI hype and strong government contracts, but its extreme valuation makes it risky. On the other hand, Super Micro Computer offers a more attractive risk-reward ratio, making it a compelling buy for value-conscious investors looking to capitalize on AI-driven growth.
