In the wake of a recent market downturn, shares of Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR) have experienced significant declines. Despite this, Wall Street analysts remain optimistic about both companies, with Nvidia expected to deliver more substantial gains in the coming year. A closer examination of the two stocks reveals the underlying factors driving their respective investment theses.
As of April 8, Nvidia’s stock was trading around $101, with a median target price of $175 among the 67 analysts covering the company. This projection suggests a remarkable upside of approximately 73%. The investment thesis for Nvidia is straightforward: the company’s dominance in accelerated computing positions it perfectly to capitalize on the growing demand for artificial intelligence (AI). Nvidia’s graphics processing units (GPUs), often referred to as AI accelerators, are among the most sought-after chips in the market, and the company is also a leader in AI networking technology.
Nvidia enhances its hardware offerings with a comprehensive suite of software development tools known as CUDA. This platform includes hundreds of code libraries, frameworks, and pretrained models that assist engineers in developing a wide range of applications, from AI agents to autonomous vehicles. According to Toshiya Hari at Goldman Sachs, Nvidia is likely to remain the industry standard for the foreseeable future due to its competitive advantages in both hardware and software.
The company’s financial performance has been impressive, with Nvidia reporting a 78% increase in revenue to $39 billion in the fourth quarter, driven by strong demand for AI infrastructure. Non-GAAP earnings also rose 71% to $0.89 per diluted share. Analysts expect Nvidia’s adjusted earnings to grow by 51% in fiscal 2026, which ends in January. Given the projected 36% annual growth in AI spending through 2030, Nvidia’s current valuation of 35 times earnings appears attractive, making it a compelling buy for investors looking to enter the AI market.
On the other hand, Palantir Technologies presents a different investment narrative. The company’s strength lies in its ability to operationalize AI for clients across both commercial and government sectors. While many firms offer AI development tools, Palantir excels in helping customers build and deploy AI applications that address real-world problems and enhance decision-making processes.
Palantir’s fourth-quarter results were also strong, with revenue increasing 36% to $828 million and non-GAAP earnings climbing 75% to $0.14 per diluted share. The company added 43% more customers, bringing the total to 711, and the average spend per existing customer rose by 20%. Wall Street anticipates a 37% increase in Palantir’s adjusted earnings in 2025, although this estimate may be conservative given IDC’s projection of 40% annual growth in AI platform spending through 2028. However, Palantir’s current valuation of 200 times earnings raises concerns about its affordability, even if earnings growth exceeds expectations.
In conclusion, while both Nvidia and Palantir offer unique opportunities in the AI space, Nvidia appears to be the more attractive investment at its current price. With a strong market position, impressive financial results, and a favorable growth outlook, Nvidia is well-positioned to capitalize on the burgeoning demand for AI technologies. Conversely, while Palantir has demonstrated solid performance and growth potential, its high valuation may deter some investors. For those looking to invest in AI stocks, Nvidia stands out as the better buy in today’s market.
