Better Artificial Intelligence Stock: AT&T vs. Palantir Technologies

Core Viewpoint - The tech industry is increasingly focused on artificial intelligence (AI) as a key driver for business growth, providing investors with numerous AI stock options [1] Group 1: Company Overview - AT&T is a telecommunications giant that plays a crucial role in connecting AI devices to the internet, leveraging its extensive wireless internet infrastructure [2][4] - Palantir Technologies is an AI data analytics company that has experienced rapid growth due to high demand from both the U.S. government and private sector for its AI-powered analytics services [6][11] Group 2: Market Position and Performance - AT&T's sales increased by 2% in the first quarter, reaching $30.6 billion, with non-GAAP earnings rising by 6% to $0.51 per share; the company forecasts free cash flow of $16 billion for 2025 and adjusted earnings per share of $2.02 [9] - Palantir's revenue surged by 39% in the first quarter to $884 million, with adjusted earnings increasing by 62% to $0.13 per share; the company raised its full-year sales growth outlook to 36%, up from 31% [10] Group 3: Competitive Analysis - Palantir is growing significantly faster than AT&T, benefiting from its position as a pure AI play with a total addressable market of $1.4 trillion [7][11] - While AT&T's telecom services are essential for AI companies, Palantir's rapid revenue growth and profitability position it as the superior investment in the AI sector [11] Group 4: Valuation Considerations - Palantir's trailing price-to-earnings ratio is exceptionally high at 546, compared to the S&P 500's P/E of 24 and Nvidia's 45, indicating that investors may need to be cautious about entering at current valuations [12][13]