Palantir

PLTR

Market cap $322B

Palantir develops a suite of AI software tools used by large corporations and government agencies. Nvidia is the biggest supplier of GPUs for hyperscale AI data centers.

Sandisk is thriving from a memory chip shortage. Palantir's AI software is incredibly popular in commercial and government settings.

Palantir has long been a trusted source for government software. Using Nvidia's AI model ensures workloads will run on Nvidia's hardware.

Two of the market's most talked-about AI plays sit on very different footings this summer.

Palantir generated 85% revenue growth while operating expenses rose only 32%, driving 60% adjusted operating margins and 57% free cash flow margins. Stable stock-based compensation alongside rapidly growing revenue is allowing earnings and free cash flow to compound much faster than sales. Remaining performance obligations surged 134% to $4.5 billion, while 150% net dollar retention highlights expanding customer spending after deployment.

Palantir Technologies Inc. (NASDAQ:PLTR) has been in the spotlight over the past few weeks after a string of strategic partnership announcements and a wave of analyst activity.

AMD stock price exploded higher in the quarter as the evolution of the LLM market has led us to agentic AI workloads. CrowdStrike's strong performance in the quarter was due to a narrative shift in the AI trade. Intuitive Surgical stock's second quarter underperformance was due to multiple contraction, which dinged the stock for 21%, slightly offset by strong forward earnings growth.

Palantir's exceptional business results justify a premium over most stocks. The stock's not cheap at 64 times sales, but it has cooled considerably since last year.

A high market cap doesn't mean a stock is overpriced. Nvidia's valuation is high, but its strong earnings suggest it's not that expensive.

Palantir stock is having a rough year as investors rotate out of software names and into memory plays like Sandisk and Micron. PLTR has fallen 36% from its all-time high last year, but despite the pullback, the company still has notable catalysts that should support stronger performance over the long term.