Palantir vs. Nvidia: Which Stock Will Outperform in 2026?

Core Viewpoint - Palantir Technologies and Nvidia have been significant beneficiaries of the AI boom, with Nvidia being favored for investment heading into 2026 due to its strong market position and valuation metrics [1][14]. Summary of Palantir - Palantir Technologies has established itself as a leader in AI operating systems, with a current market cap of $433 billion and a stock price of $181.61 [4][5]. - The company has experienced accelerating revenue growth for nine consecutive quarters, culminating in a 63% revenue increase in Q3 [5][6]. - Palantir's AI platform, AIP, is gaining traction in the U.S. commercial sector, leading to a 121% increase in U.S. commercial revenue and a 342% surge in total U.S. commercial contract value [7][8]. - The customer base grew by 45%, with a net dollar retention rate of 134%, indicating strong expansion among existing customers [7]. - Despite its growth potential, Palantir's valuation is a concern, trading at a forward price-to-sales (P/S) multiple of nearly 69 times 2026 analyst estimates [8]. Summary of Nvidia - Nvidia has a market cap of $4509 billion and a stock price of $184.65, having seen its revenue increase nearly tenfold over the past three years, with a 62% growth in Q3 to $57 billion [9][10]. - The company is recognized as the leader in AI infrastructure, with its GPUs being the primary chips for AI workloads [11]. - Nvidia has created a competitive advantage through its CUDA software platform and NVLink interconnect system, which fosters a lock-in effect for customers [12]. - With ongoing AI infrastructure spending, Nvidia is well-positioned to capture a significant share of the market [13]. - The stock is considered reasonably valued, trading at a forward price-to-earnings (P/E) ratio of under 24.5 and a price/earnings-to-growth (PEG) ratio below 0.7, contrasting sharply with Palantir's valuation [15].