Palantir Stock vs. Nvidia Stock: Wall Street Says Sell One and Buy the Other

Palantir Technologies (NYSE: PLTR) and Nvidia (NASDAQ: NVDA) are two of the hottest artificial intelligence (AI) stocks on Wall Street. In fact, with year-to-date returns of 132% and 150%, respectively, they rank among the five best-performing components of the S&P 500.

However, Wall Street expects the stocks to move in opposite directions over the next year.

• Among the 23 analysts who follow Palantir, the median price target is $27 per share, which implies 32% downside from its current share price of $40.

• Among the 65 analysts following Nvidia, the median price target is $150 per share, which implies 20% upside from the current share price of $125.

Furthermore, Palantir is the most overvalued stock in the S&P 500 based on the difference between its current price and median price target. Meanwhile, according to FactSet Research, Nvidia ranks among the most highly recommended stocks in the S&P 500 in terms of its percentage of buy ratings.

Suffice it to say Wall Street is overwhelmingly bearish on Palantir but very bullish on Nvidia. Here are the most important details for investors.

Palantir Technologies: 32% downside implied by the median price target

Palantir has deep roots in counterterrorism and clandestine military operations. The company spent its earliest days building analytics software for federal agencies in the U.S. intelligence community. But it has since expanded its customer base to include international governments and commercial organizations.

Palantir's data operations platforms, Foundry and Gotham, let customers incorporate data and machine learning models into analytical applications that improve decision-making. And its AI platform, AIP, allows commercial and government clients to use large language models and generative AI within Foundry and Gotham.

Some analysts have lauded Palantir for its sophisticated technology. For instance, it was a top-ranked vendor in Dresner Advisory Services' 2024 market study on artificial intelligence, data science, and machine learning platforms. Forrester Research recently recognized its leadership in AI and machine learning platforms.

Other analysts are less impressed. Gartner scored Palantir below a dozen other vendors in data integration capabilities, citing overreliance on consulting services. That means some clients find Palantir's software so complex that they struggle to use it independently. Gartner also omitted Palantir in its latest report on data science and machine learning platforms.

Palantir reported second-quarter financial results that exceeded expectations on the top and bottom lines. Revenue rose 27% to $678 million, the fifth consecutive acceleration in sales growth. Meanwhile, non-GAAP (generally accepted accounting principles) net income increased by 80% to $0.09 per diluted share. And management provided better-than-expected guidance for the third quarter.