Prediction: The Best-Performing Artificial Intelligence Stock of 2026 Won't Be a Chipmaker

Semiconductor companies provide the backbone for artificial intelligence (AI) technology. The cutting-edge chips designed and manufactured by these businesses are essential for running AI workloads such as large language models (LLMs) and inference applications.

As such, it's completely understandable that semiconductor giants such as Nvidia, Broadcom, and TSMC have been big winners on the stock market since the AI megatrend began to accelerate. In the past three years, the PHLX Semiconductor Sector index has shot 217% higher. However, there's one company that's been outpacing even the terrific returns being delivered by major semiconductor names in the past year -- Palantir Technologies (NASDAQ: PLTR).

Shares of the software and analytics provider have risen by a remarkable 394% in the past year (as of this writing), outperforming the semiconductor stocks mentioned above by massive margins. Moreover, it wouldn't be surprising for Palantir to sustain its momentum in 2026 and retain its status as the best-performing AI stock.

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Palantir Technologies' growth is accelerating at a remarkable pace

Palantir released its third-quarter results after the market close Monday, reporting an impressive revenue increase of 63% year over year to $1.18 billion. What's more, its non-GAAP earnings more than doubled to $0.21 per share. Those growth rates improved remarkably from the prior-year period, when its revenue increased by 30% and adjusted earnings jumped by 43%.

This outstanding growth was driven by the robust adoption of the company's Artificial Intelligence Platform (AIP), which helps businesses and governments integrate generative AI into their operations. Palantir customers can use AIP to build and deploy AI applications with their own data to improve productivity, reduce redundancy, automate workflows, and predict failures, among other things. The company points out that AIP gives customers the ability to make real-time decisions with the help of AI.

So, Palantir provides a product that helps organizations reap the benefits of AI models that are trained using chips manufactured by semiconductor companies. This is one of the key reasons why investors have been so upbeat about Palantir stock in the past year. The good part is that AIP is set to supercharge Palantir's growth further in 2026 and beyond.

The company is signing bigger deals and adding new customers at a faster pace. Its customer count increased by 45% year over year in Q3, up by 6 percentage points from its growth rate in the same quarter last year. The company also landed a record $2.76 billion worth of contracts, up by 151% from the year-ago quarter. Again, that's a big improvement over the 33% jump in contract value clocked by Palantir in the prior-year period.

These metrics clearly indicate that AIP is not just helping Palantir attract new customers; the benefits that its existing customers are reaping are helping Palantir win more business from those established customers. As CFO David Glazer stated on the latest earnings call, "AIP continues to drive existing customer expansions and new customer conversions."

This explains why Palantir saw a much bigger spike in its earnings last quarter than the jump in its revenue. That trend is likely to continue as Palantir's revenue pipeline is growing at an incredible pace. It reported $8.6 billion in remaining deal value (RDV) at the end of the quarter -- up by 91% from a year prior.

RDV is the total value of contracts that are signed, but that have yet to be fulfilled. This healthy backlog explains why Palantir management increased its full-year revenue guidance to $4.4 billion from the earlier forecast of $4.15 billion. However, don't be surprised to see the company ending the year with much stronger growth, considering its RDV and the rapidly growing demand for its AI software platforms.

But what about this concern?

Even though it delivered a stellar report, Palantir's shares pulled back. As of Wednesday's closing bell, they were down by more than 9% from where they stood before the report came out. That may seem surprising as Palantir didn't just blow past analysts' consensus expectations, but also raised its guidance. One explanation for the slide relates to the company's valuation. Palantir still trades at a whopping 137 times sales and 217 times forward earnings as of this writing.

There is no doubt that those multiples make this AI stock prohibitively expensive for many investors to buy right now. But as Palantir's latest results tell us, the company has been witnessing a significant uptick in its growth. That trend is likely to persist, as the outstanding growth in Palantir's RDV makes it clear that it is winning new business at a faster pace than it is delivering.

As a result, Palantir's revenue in 2026 could easily outpace the 34% jump that analysts are projecting. After all, the company reported nearly double that revenue growth in the previous quarter. Also, its earnings are likely to grow at a significantly faster pace than the 29% increase that Wall Street is forecasting for next year, considering the points discussed above.

Palantir, therefore, has the ability to justify its valuation and soar to new highs in 2026 -- outperforming the semiconductor sector once again.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.