AI Stock Sell-Off: Should You Buy Palantir or Nvidia Stock on the Dip?
Two of the market’s most popular artificial intelligence (AI) stocks have been heavily sold off over the past few weeks. At the time of this writing, Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR) were down 25% and 32%, respectively, from their all-time highs.
This begs the question: Are either of these two worth buying on the dip? Let’s take a look — the answer may surprise you as to which is the superior stock to buy right now.
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Both companies have strong positions in the AI race
First, let’s talk about what each company does.
Nvidia makes graphics processing units (GPUs) and the infrastructure to support their use. GPUs are the computing muscle behind AI, and Nvidia has a dominant market share in this sector.
Most of the AI revolution has been powered by Nvidia’s Hopper architecture (like its H100 or H200 GPUs), but the company is still ramping up production of its latest architecture, Blackwell. These GPUs are far more powerful than their predecessors and will be a massive growth driver for years to come.
Palantir makes AI-powered data analysis software. The easiest way to describe how its software works is: data in, insights out, with AI working hard in the middle.
This simple concept has grown into a massive business for Palantir, with customers worldwide in both the government and commercial sectors. One product that’s driving a ton of growth right now is its AIP (Artificial Intelligence Platform). It allows users to interweave AI throughout a business’ inner workings, allowing them to automate processes with AI agents and have AI models built into tasks that employees do every day.
Both companies have a strong investment thesis, but that does nothing for determining which is the better buy right now. To determine that, let’s look at their financials and valuations.
Palantir’s valuation is far higher than Nvidia’s
In terms of scale, Nvidia and Palantir don’t compare well. Over the past 12 months, Nvidia has generated revenue of $130 billion versus Palantir’s $2.87 billion.
NVDA Revenue (TTM) data by YCharts; TTM = trailing 12 months.
Just because Nvidia makes a boatload more money than Palantir doesn’t necessarily make it a better stock, but it does give investors a clue as to the size comparison between these two.
Despite Nvidia’s size, it’s also projected to grow a lot faster this year. For its 2026 fiscal year (ending January 2026), Wall Street analysts expect revenue of $204 billion, indicating 56% growth. For 2025, Wall Street analysts expect Palantir to grow its revenue by 32% to $3.79 billion. Clearly, Nvidia has a growth advantage over Palantir, so this is one victory for Nvidia.
Moving to valuation, it’s another blowout win for Nvidia.
NVDA PE Ratio (Forward) data by YCharts.
Nvidia trades for a dirt cheap 25 times forward earnings, especially considering the massive market opportunity of AI hardware. Palantir is far more expensive at 144 times forward earnings. However, some Palantir bulls may reply that this is because Nvidia is far more mature, and Palantir’s forward price-to-earnings ratio (P/E) isn’t the best measure.
I’ll entertain that argument, so let’s project growth Palantir has baked into its stock price. Let’s assume these three things:
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Palantir’s revenue growth accelerates to 35% and stays there for seven years.
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The company’s profit margin rises to 30%, a top-tier software company margin.
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The effects of its rising share count are ignored.
If those three things come true over the next seven years, the company will produce revenue of $23.4 billion and profits of $7 billion. That’s a huge increase over today’s figures, but it would still value its stock at 27 times seven-year forward earnings.
This means that even if Palantir exceeds growth expectations and holds them steady for seven years, and its stock price stays absolutely flat, it will still be more expensive than Nvidia is right now.
That makes this analysis very easy for me: Buy Nvidia. There’s no reason to hold Palantir with the absurd assumptions baked into the stock price, and that money would be better invested in a solid growth company like Nvidia.
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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.