Palantir Is Launching New AI OS Reference Architecture with Nvidia. Should You Buy PLTR Stock?
Although Palantir’s (PLTR) new partnership with Nvidia (NVDA) could move the needle positively for PLTR, the company appears to be facing increased competition and still trades at extremely high valuations. Additionally, the evolution of artificial intelligence (AI) could hurt the company’s business, and evidence suggests that the Street remains somewhat skeptical about software stocks. Also…
Although Palantir’s (PLTR) new partnership with Nvidia (NVDA) could move the needle positively for PLTR, the company appears to be facing increased competition and still trades at extremely high valuations. Additionally, the evolution of artificial intelligence (AI) could hurt the company’s business, and evidence suggests that the Street remains somewhat skeptical about software stocks. Also noteworthy is that the company’s co-founder and chairman, Peter Thiel, recently indicated that he planned to unload a large amount of PLTR stock.
Since all of PLTR’s weaknesses and negative catalysts far outweigh its deal with Nvidia, I do not recommend that investors purchase PLTR stock at this point.
Specializing in data analytics, Palantir developed an artificial intelligence platform (AIP) that enables organizations to easily utilize AI to draw conclusions based on their data. Based in Miami, Palantir has historically focused on helping governments analyze data.
Last quarter, Palantir’s revenue jumped 70% versus the same period a year earlier to $1.4 billion, while its net income attributable to common stockholders soared to $608.7 million in Q4 from $79 million in Q4 2024.
The company’s market capitalization is $361 billion, and its forward price-to-earnings ratio is 148x, while it is changing hands for 48.2x its book value.
www.barchart.com
Palantir is partnering with Nvidia to develop “AI OS reference architecture” for organizations. The product, which is supposed to enable enterprises to easily create AI data centers and launch AI apps, utilizes Nvidia’s AI hardware and supports PLTR’s software.
In my view, the agreement could be a modest, positive catalyst for Palantir’s financial results. The architecture could be quite useful for many organizations looking to implement AI at scale, but other companies have likely launched similar offerings already. The offering could be particularly useful for foreign governments that are looking to implement massive amounts of AI relatively quickly but that have established little of the necessary infrastructure to do so.
A Seeking Alpha columnist recently warned that Palantir is facing increasing competition from the hyperscalers, and there is indeed evidence that the hyperscalers are intensively scaling up and marketing software that helps organizations implement AI. For example, Alphabet’s (GOOG) (GOOGL) AI offering for enterprises, Gemini Enterprise, “has already sold more than 8 million paid seats in roughly four months,” PYMENTS reported last month.
Meanwhile, Amazon (AMZN) has noted that “Amazon Bedrock powers generative AI for more than 100,000 organizations worldwide.” For its part, Microsoft’s (MSFT) Azure recently unveiled AI agents tailored to helping organizations advance their “AI capabilities.” Given the hyperscalers’ huge customer base and marketing capabilities, they appear well-positioned to meaningfully slow the growth of Palantir’s AIP.
Despite this major threat, PLTR stock, as I noted above, still trades at an extremely high valuation.
Some prognosticators have warned that Palantir’s analytics business could be meaningfully hurt by the proliferation of AI tools. Software firms that have obtained a great deal of valuable data in specific areas, such as Intuit (INTU), are likely to be somewhat protected from AI competition for some time. That’s because AI agents won’t have the necessary data to make good substitutes for such software for years.
On the other hand, Palantir, whose commercial business seems to be based on analyzing highly diverse data from a variety of businesses, could easily be supplanted by top-notch AI agents in the medium term. That’s because the best AI agents can also easily analyze data supplied by companies.
And in the shorter term, the Street’s skepticism about software stocks is likely to keep PLTR stock from breaking out. Indeed, many software stocks remain well off their six-month highs.
Earlier this month, Palantir’s chairman noted in a regulatory filing that he intended to sell 2 million shares of PLTR stock. Although Thiel still owns much more PLTR stock than he sold, the move does not radiate a great deal of confidence in the outlook of PLTR stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
