Considering the Current Market Scenario, Is It Wise to Overlook Palantir and Invest in These Three Promising Artificial Intelligence (AI) Shares Immediately?
Palantir Technologies (PLTR 0.39%) was one of the buzzing AI stocks in 2024, mainly due to its growing commercial client base adopting its AI Platform and the U.S. government increasing its spending. The company still has plenty of room to grow as its early AI success with commercial clients is moving from proof-of-concept to full-scale implementation, leading to a revenue boom.
Let's delve into three other AI stocks that present attractive investment opportunities:
Nvidia (NVDA 1.19%)
Nvidia, like Palantir, has been a significant AI success, but it comes with a more affordable price tag. With a forward P/E ratio of 32 based on 2025 earnings and a PEG ratio of 1, Nvidia appears undervalued, even for growth stocks, which often have PEG ratios above 1. Nvidia's GPUs have become essential components of AI infrastructure, powering model training and inference. Microsoft's $80 billion investment in AI data centers to handle AI workloads in 2024 solidifies the market for GPUs, ensuring Nvidia's continued reign as an AI champion.
GitLab (GTLB -4.49%)
GitLab, similar to Palantir, is growing rapidly, but it trades at a more budget-friendly valuation. GitLab offers a DevSecOps platform that creates software while integrating cybersecurity throughout the process. Last quarter, GitLab posted revenue growth of 31%, marking its sixth consecutive quarter of growth between 30% to 40%. GitLab's Duo, an AI-powered toolset, is fueling this growth. The product is gaining popularity among both new and existing customers, driving high net revenue retention numbers. GitLab Dedicated, a feature-rich service, also boosts demand for its Ultimate platform, with 48% of clients now using it. The partnership with Amazon (AWS) further enhances GitLab's growth prospects.
AppLovin (APP 3.07%)
AppLovin has outperformed Palantir in 2024, offering a more affordable valuation with a forward P/E ratio of 37 and a PEG of 0.59. AppLovin's AI-powered adtech tool, Axon-2, targets new game users effectively and improves with usage, driving revenue growth. Its software platform revenue rose 66% to $891 million in the last quarter, while overall revenue climbed 39% to $1.2 billion. With potential to expand Axon-2 beyond gaming, AppLovin offers exciting growth prospects.
- In comparison to Palantir, Nvidia's stock price is more affordable, with a forward P/E ratio of 32 for 2025 earnings and a PEG ratio of 1, indicating potential undervaluation.
- The integration of AI in Nvidia's GPUs has made them essential components for AI infrastructure, powering model training and inference. This is further solidified by Microsoft's $80 billion investment in AI data centers in 2024.
- Similar to Palantir, GitLab is experiencing rapid growth, posting a revenue growth of 31% last quarter, marking its sixth consecutive quarter of growth between 30% to 40%. This growth can be attributed to its AI-powered toolset, Duo, which is gaining popularity among clients.
- By 2025, Palantir's financial growth might surpass that of AppLovin, considering its early AI success with commercial clients is moving towards full-scale implementation, leading to a revenue boom. However, as of now, AppLovin offers a more affordable valuation with a forward P/E ratio of 37 and a PEG of 0.59.
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