Prediction: These 2 Artificial Intelligence (AI) Stocks Will Be Worth More Than Palantir by the End of 2026

Core Viewpoint - Palantir Technologies has shown significant stock growth, but smaller AI companies like Alibaba and AMD may outperform it in the near future, potentially surpassing its valuation by the end of 2026 [1][2][9]. Palantir Technologies - Palantir's stock has increased by 167% in 2023 and 340% in 2024, with a year-to-date rise of approximately 148%, leading to a market cap of $448 billion [1]. - The company achieved a revenue growth of 63% and an adjusted operating margin of 51%, resulting in a Rule of 40 score of 114, indicating strong growth and profitability [4]. - Despite its profitability and growth exceeding analyst expectations, the stock price has declined following the release of its third-quarter earnings [5]. - Palantir's stock trades at nearly 100 times analysts' revenue expectations for 2026 and 250 times expected forward earnings, suggesting that future growth is already priced in [7]. - Analysts have raised their price targets for Palantir, with a median target of $200, but most maintain a hold or sell rating, indicating skepticism about further price increases [8]. Alibaba Group - Alibaba is not only a leading e-commerce platform but also the largest cloud infrastructure provider in China, with AI services revenue growing at a triple-digit pace for nine consecutive quarters, contributing to a 34% increase in total cloud revenue [10]. - The company has invested approximately $17 billion into AI and cloud infrastructure over the past year, although it faces challenges in meeting the demand for AI services [11]. - Alibaba's market cap is currently $378 billion, and if it continues to grow, it could surpass Palantir's valuation [15]. - The market may be undervaluing Alibaba's growth potential, as its forward P/E ratio is under 24, significantly lower than other AI stocks [14]. Advanced Micro Devices (AMD) - AMD is making strides in the GPU market, competing effectively with Nvidia, and expects its data center revenue to grow by an average of 60% over the next three to five years, with AI-specific solutions projected to grow at an annualized rate of 80% [16][17]. - The company anticipates capturing at least 10% of the AI compute market, which is expected to reach $1 trillion by 2030, potentially leading to higher gross margins and stronger earnings growth [17]. - AMD's forward P/E ratio is around 55, but it trades for only 21 times expectations for 2027 earnings, suggesting it could be undervalued if long-term earnings projections are met [20]. - With a current market cap of $360 billion, AMD will need continued strong performance to surpass Palantir, but the upcoming release of its MI450 series could serve as a catalyst for growth [21].