What a year it's been for Palantir Technologies(NYSE: PLTR). Shares of the data analytics software company have soared 112%. Palantir was added to the S&P 500 in September. The company has announced major deals and partnerships with big names including BP, Microsoft, and Wendy's.
Nvidia(NASDAQ: NVDA) has been an even bigger winner, with its stock skyrocketing 136% year to date. However, the giant chipmaker's shares are close to 14% below the peak set this summer. Investors have fretted about Nvidia's delayed launch of its new Blackwell GPU platform.
Despite these concerns, Wall Street is much more bullish about Nvidia than Palantir. That begs the question: Why?
What Wall Street thinks about Nvidia and Palantir
Global financial markets data provider LSEG surveyed 60 analysts in September who cover Nvidia. Eighteen rated the stock as a "strong buy" (or equivalent rating). A whopping 37 analysts recommended Nvidia as a "buy." The remaining five analysts viewed the stock as a "hold."
The picture wasn't quite as rosy for Palantir. Of the 18 analysts surveyed by LSEG last month, only three recommended the stock as a "strong buy." Another three analysts rated Palantir as a "buy." Six analysts recommended holding the stock. Four rated the software stock as "underperform" while two others recommended selling Palantir's shares.
Wall Street's 12-month price targets for these two stocks further highlight the gap between them. The consensus price target for Nvidia reflects an upside potential of nearly 27%. The most optimistic analyst surveyed by LSEG thinks Nvidia's shares could soar another 73% over the next 12 months.
It's a much different story for Palantir. The average 12-month price target among the analysts surveyed by LSEG is roughly 25% below the current share price. The most optimistic analyst predicts Palantir could rise 37%.
Why Nvidia enjoys much more support from analysts
Wall Street likes Nvidia more than Palantir for several reasons. The most important factor is the different perceptions about the two companies' growth prospects. To be sure, analysts believe both Nvidia and Palantir can deliver strong growth. However, Nvidia dominates its market in a more powerful way than Palantir does.
Although Nvidia's Blackwell GPUs won't begin shipping as quickly as analysts would have preferred, they still expect Blackwell to be a huge commercial winner. I suspect some on Wall Street agree with Nvidia CEO Jensen Huang that Blackwell will be the most successful product in the company's history.
Analysts also see Nvidia as having a broader market opportunity. Organizations in pretty much every industry and of all sizes are scrambling to develop artificial intelligence (AI) capabilities, driving the demand for Nvidia's GPUs. Palantir arguably has a more limited opportunity, with more than half of its total revenue stemming from government contracts.
Nvidia's financial metrics are much stronger than Palantir's as well. In the second quarter of 2024, the company's revenue soared 122% year over year to $30 billion. By comparison, Palantir's Q2 revenue rose 27% year over year to $678 million.
Wall Street no doubt prefers Nvidia's valuation, too. The stock might seem expensive with a forward earnings multiple of 30.8. However, Nvidia's price-to-earnings-to-growth (PEG) ratio based on five-year growth projections is an attractive 0.93. Palantir's forward earnings multiple is a sky-high 87 with a PEG ratio of 1.88.
Is Wall Street right about Nvidia and Palantir?
I'm not sure if Nvidia's shares will jump another 27% and Palantir's shares will fall 25% over the next 12 months as the average analysts' price targets project. My hunch is analysts aren't super-confident about those price targets, either.
However, I do agree with the Wall Street consensus that Nvidia is a better stock to buy right now than Palantir. If the demand for AI chips slows, Nvidia could be in trouble with its premium valuation. That doesn't seem likely at this point, though. With Blackwell on the way, I expect Nvidia will keep up its winning ways.
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Keith Speights has positions in Microsoft. The Motley Fool has positions in and recommends BP, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
