Is Palantir's Latest Earnings Report a Warning for Nvidia Investors?

Looking at Palantir Technologies' (NASDAQ: PLTR) latest earnings report, you might have expected the stock to surge. The software company reported earnings that surpassed analysts' estimates, raised full-year guidance, and spoke of soaring demand. Customers have been rushing to Palantir as its software allows them to immediately apply artificial intelligence (AI) to their operations -- for these customers, it represents a fast and easy way to reap the benefits of AI.

Following the Nov. 3 report, though, Palantir's stock didn't climb. In fact, in the next trading session, it fell nearly 8% -- and has extended that loss to about 16%. Now, the question is: With Nvidia's (NASDAQ: NVDA) earnings report just ahead, is Palantir's experience a warning for Nvidia shareholders? Let's find out.

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Palantir's recent declines

As mentioned, Palantir stock has been on the decline in recent days, even though the company wowed investors with its earnings report. Why should we compare Nvidia and Palantir? Because both companies have been generating significant revenue growth in the AI market and have what it takes to continue benefiting as the AI boom reaches its next stages. On top of this, they've led stock market gains -- Palantir has soared 2,000%, while Nvidia has advanced 1,100% over the past three years.

Nvidia is scheduled to report third-quarter earnings for the 2026 fiscal year on Nov. 19 following the closing bell. And a few clues offer us reason to be optimistic. First, Nvidia has a track record of surpassing analysts' estimates -- the company did so over the past four quarters. Second, recent reports from Nvidia customers such as cloud service providers Amazon and Alphabet show that their customers are seeking more and more compute -- and these cloud players say they will continue to invest heavily to ramp up AI infrastructure.

All of this suggests Nvidia may have had a very good third quarter. Meanwhile, Nvidia itself offered us a sneak peek when chief Jensen Huang recently spoke of orders for its AI platforms. He said total cumulative shipments of the current Blackwell platform, the upcoming Rubin system, and networking equipment over this year and 2026 so far total $500 billion.

So, it's reasonable to be optimistic about what Nvidia will report this week and about the company's forecasts for the coming months.

Valuations of Palantir and Nvidia

But, like Palantir, could Nvidia see its stock slump even as it reports good news? It's important to note that Palantir's case differs from that of Nvidia in one specific area. Palantir's valuation has represented a growing concern for investors. Palantir trades for more than 230x forward earnings estimates compared to Nvidia's 40x. Nvidia remains in reasonably priced territory, while Palantir today is seen as extremely pricey. And that one factor has weighed on Palantir's performance, especially as investors have started to worry about the possibility of an AI bubble forming.

So, even though Palantir reported excellent earnings, some investors preferred locking in profits, and others have hesitated to get in on the stock at today's price level.

While Nvidia stock isn't cheap, its price is fair considering growth delivered so far and the company's long-term outlook. This means valuation isn't a major reason to flee the stock.

Still, considering Nvidia's performance over time, some shareholders may reduce positions and secure a gain even if the earnings report is fantastic. As we've seen with Palantir -- and even other companies in the past -- a great earnings report doesn't always push a stock price higher.

What does this mean for you as an investor? Nvidia's short-term performance after an earnings report shouldn't alter your view of the company's prospects. And stock movement over a short period of time won't impact your portfolio's performance much at all if you hold onto this -- or any other -- stock for a period of years.

This is great news because it means you can focus on the contents of Nvidia's earnings report instead of worrying about daily stock moves -- and consider how this top AI stock may grow your wealth over time.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.