News

For Immediate Release

Chicago, IL – December 16, 2024 – Zacks.com announces the list of Stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Palantir Technologies Inc. PLTR, NVIDIA Corp. NVDA, Microsoft Corp. MSFT, Alphabet Inc. GOOGL and Oracle Corp. ORCL.

Here are highlights from Friday’s Analyst Blog:

NVIDIA or Palantir: The Best AI Investment for 2025

With the advent of artificial intelligence (AI), shares of Palantir Technologies Inc. and NVIDIA Corp. have witnessed parabolic gains, making them popular investments on Wall Street. This year, Palantir’s shares have outperformed NVIDIA (+324.8% vs +177.2%).

However, does this mean Palantir is a better buy than NVIDIA for the new year? Let’s see –

The Bullish Case for PLTR Stock

The Artificial Intelligence Platform (AIP) that Palantir has introduced has gained immense popularity. It aids businesses in integrating large language models into their operations, which increases the company’s profitability.

The AIP platform is expected to help Palantir expand and acquire new customers. Palantir’s new customer base swelled 39% in the third quarter of 2024 on a year-over-year basis. In the last quarter, transactions above $1 million surged by 30%, leading to an increase in deal size.

Palantir reported strong revenues and earnings in the third quarter, driven by the AIP momentum. The company was also able to generate business from its existing customers since the third-quarter net-dollar retention rate of 118% surpassed the 107% rate from a year ago.

The future, meanwhile, looks promising for Palantir as its remaining deal value of $4.5 billion surged 22% year over year in the previous quarter. Thus, Palantir expects 2024 revenues to reach $2.8 billion, a 25% jump from 2023’s $2.23 billion. As a result, the $0.38 Zacks Consensus Estimate for PLTR’s earnings per share is up 31% from a year ago.

The Bullish Case for NVDA Stock

NVIDIA’s sheer dominance in the graphic processing units or GPU market will drive its stock price in the near term. CEO Jensen Huang confirmed that demand for its Hopper architecture remains solid despite the highly anticipated launch of next-generation Blackwell chips.

This means customers continue to have faith in NVIDIA’s older chips, and the new ones, as its products remain superior to rivals.

The demand for cutting-edge Blackwell chips has skyrocketed, and once they are launched, NVIDIA’s shares are expected to increase. This is because the Blackwell chips can process high volumes of data more efficiently.

For instance, the GB200 NVL72 system in Blackwell outstrips H100 by running AI inference 30 times faster. For this reason, Microsoft Corp., Alphabet Inc. and Oracle Corp., to name a few, have become buyers of Blackwell chips.

NVIDIA has already shipped 13,000 Blackwell chips in the last reported quarter, while Morgan Stanley expects the company to ship a whopping 300,000 units in the final three months of 2024 and 800,000 units in the first three months of next year.

Thanks to the growing demand for Blackwell chips, NVIDIA is expected to maintain a healthy increase in quarterly profits despite seeing some staggering success over the past year. As a result, the $2.93 Zacks Consensus Estimate for NVDA’s earnings per share is up 47.2% from a year ago.

Why Is NVIDIA a Superior Investment to PLTR in 2025?

NVIDIA’s new AI chips should push its stock to new highs in 2025, while Palantir’s enhanced AI solutions could propel its share price. However, NVIDIA is still a better stock, hands down, than Palantir for next year.

After all, if companies reduce AI investments due to unprofitable projects, Palantir may face challenges. On the other hand, NVIDIA’s dominant position in the AI market gives the semiconductor giant greater pricing power and the potential to earn more.

NVIDIA, anyhow, has been able to generate profits more consistently than Palantir. This is because NVIDIA’s return on equity (ROE) is 120.4%, while Palantir’s ROE is 21%.

Meanwhile, unlike Palantir, NVIDIA has a sturdy business model since it pays dividends. The company’s dividend payout ratio sits at 2% of earnings and the payout has increased by 5.4% in the past five years, a tell-tale sign that the company is capable of reinvesting a major portion of its earnings into R&D.

At the same time, buying NVIDIA’s shares is more cost-effective than buying Palantir’s, giving NVIDIA an investment advantage. Per the price/earnings ratio, NVDA trades at 46.8X forward earnings. In comparison, the PLTR’s forward earnings multiple is 190.7.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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