Nvidia vs. Palantir: Wall Street’s Verdict - One’s a Must-Buy, the Other’s Dangerously Overvalued
Wall Street analysts are picking sides in the tech showdown of the decade.
The AI Arms Race Heats Up
Nvidia's chips dominate the AI infrastructure game—every major player runs on their hardware. Palantir's data-crunching platforms promise insights but burn cash chasing government contracts. Analysts see one as foundational, the other as speculative.
Valuation Reality Check
One stock trades at visionary multiples while the other gets called 'priced for perfection'—Wall Street code for 'brace for impact.' Street consensus says buy the picks-and-shovels play, not the mystery box.
The Bottom Line
In a sector where hype often outpaces revenue, analysts bet on tangible tech over bureaucratic software—because sometimes the 'disruption' is just consultants repackaging Excel with a darker UI. Place your bets wisely.
Image source: Getty Images.
Nvidia: The world's biggest company could get bigger
Surging sales and profits, combined with the HYPE around AI, have catapulted Nvidia to a roughly $4.27 trillion market cap (as of Sept. 2). With such a high valuation, some wonder how much higher Nvidia can keep going because at the end of the day, the law of large numbers suggests that beyond a certain point, growth rates invariably begin to plateau. Perhaps that's why the company's strong fiscal 2026 second-quarter earnings failed to give a lift to the stock.
But if you ask professional Wall Street analysts, Nvidia is indeed likely to keep moving higher over the next year. Of the 38 analysts who have issued research reports on Nvidia over the past three months, 34 rate the stock a buy, three call it a hold, and only one says sell, according to TipRanks. Their average one-year price target points to another 20% upside for the stock.
Nvidia currently trades at around 39 times forward earnings. That's certainly not cheap, especially for a company of its size, but by no means the most ridiculous multiple we've seen in the world of AI, especially when you consider that the chipmaker is still growing extremely fast. In fiscal Q2, Nvidia reported 61% growth in diluted earnings per share and 56% growth in revenue. Meanwhile, management is guiding for revenue to grow from the $46.74 billion it reported in the second quarter to about $54 billion in the third.
Keep in mind that for much of this year, the company has not been able to sell the H20 chips it designed specifically for the Chinese market. Those less powerful chips were previously acceptable to export to China even under the trade restrictions set by the U.S. government, but earlier in 2025, President Donald TRUMP blocked their export too. However, in August, Trump agreed to allow Nvidia to sell the chips to China again -- but the U.S. government gets 15% of the revenues from those sales.
Nvidia management has said the company could sell about $2 billion to $5 billion worth of chips to Chinese businesses in the current quarter if geopolitical tensions ease. Furthermore, CEO Jensen Huang estimates that business in China WOULD have been a $50 billion opportunity in 2025, had it not been for geopolitical tensions. Huang also thinks the opportunity in China will grow by 50% next year.
"I'm feeling more bullish," Wedbush analyst Dan Ives recently told TheStreet. "Because when you factor even in the China numbers, this is really just the start of an acceleration for Nvidia across the board."
Palantir: Even great companies can have overvalued stocks
Palantir has been a darling of the market in recent years. The company leverages AI to help government agencies and companies gather, manipulate, and analyze data in ways that have never been possible before. The platform can also recommend certain actions based on the data and discuss some of the potential repercussions of taking such actions. Palantir's stock has more than doubled this year and is up by more than 1,600% in the past five years.
It's likely for this reason that some Wall Street analysts think the stock has run too far, too fast. Of the 20 Wall Street analysts who have issued research reports on Palantir over the past three months, five have buy ratings on the stock, 13 call it a hold, and two say sell, according to TipRanks. Their average one-year price target for Palantir implies that the stock is fairly valued at its current level.
Palantir has certainly demonstrated strong growth. In the second quarter, revenue grew 48% year over year, while diluted earnings per share more than doubled. However, trading around 242 times forward earnings, the company's valuation premium is simply stunning.
Citron Research's Andrew Left, a famous short-seller, said he is a fan of the company and its CEO, Alex Karp, but that the valuation has clearly gotten out of hand.
"It's a wonderful company, but if this was the greatest company that was ever created and we gave it the same multiples, let's say Nvidia in 2023, the stock still can get cut by two-thirds, and that would be like 35 times sales," he said in an interview on Fox Business last month.
Some investors still may want to add the stock to their portfolios to increase their exposure to the AI space. If you're one of them, I would recommend either using a dollar-cost averaging approach, which would smooth out your cost basis over time, or waiting for a better entry point to buy.
