Shares of Palantir Technologies Inc. PLTR, which sells a well-liked artificial intelligence (AI)-powered software platform, have surged 74.7% so far this year, outperforming the leading AI chip maker, NVIDIA Corporation’s NVDA 17.1% gain. Can Palantir keep outperforming NVIDIA in the second half, and is it the better AI stock for your portfolio?
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The surge in demand for NVIDIA’s state-of-the-art new-generation Blackwell chips helped the company’s sales grow 69% year over year to $44.1 billion in the fiscal first quarter, which ended on April 27. NVIDIA overcame supply-chain bottlenecks and delivered Blackwell AI servers to customers such as Microsoft Corporation MSFT.
Strong demand for AI chips will boost NVIDIA’s sales, supported by increased developer adoption of the CUDA platform. The AI revolution in self-driving cars and autonomous robots also benefits NVIDIA. As major cloud computing companies like Amazon.com, Inc. AMZN and Alphabet Inc. GOOGL purchase NVIDIA’s graphics processing units (GPUs), in which the company holds a large share, the company is likely to see further growth.
President Trump’s tariffs and export restrictions on AI chips to China may impact NVIDIA’s sales, but the company is adjusting its hardware specifications to resume sales there. Even without China, NVIDIA is positioned to benefit from the worldwide demand for AI capabilities.
A rise in both commercial and government contracts helped Palantir increase its revenues in the first quarter. Commercial revenues increased 71% year over year (YoY) to $255 million, while government revenues rose 45% YoY to $373 million.
Palantir’s sales growth has contributed to strong financial results, with net income reaching $217.7 million in the first quarter, more than doubling last year’s $106.1 million. Palantir’s adjusted free cash flow for the quarter was $370 million, up 42% YoY. Additionally, the remaining performance obligations of $1.9 billion and an estimated total addressable market of over $1 trillion in the next decade indicate Palantir’s continued strength.
Palantir’s Artificial Intelligence Platform (AIP), capable of automating tasks beyond human reach, drove its revenue growth. The company’s new AI products, like Warp Speed, which uses AI to improve U.S. manufacturing efficiency, are also expected to boost revenues.
Meanwhile, Palantir shareholders are excited about President Trump’s “Big, Beautiful Bill”. This is because Palantir is a key player in developing the Golden Dome missile defense system, included in the bill. Moreover, the ongoing geopolitical tensions and the AI arms race could further benefit Palantir.
