Nvidia CEO Jensen Huang Just Delivered Incredible News for Palantir Stock Investors

The advent of generative artificial intelligence (AI) has had a profound impact on the technology landscape, and arguably no company has benefited more from this paradigm shift than Palantir Technologies (NASDAQ: PLTR). The company had already established itself as a key data mining and analytics partner to both government and enterprise.

Palantir leveraged its decades of AI experience and data mining expertise to launch the company's Artificial Intelligence Platform (AIP), which quickly became the gold standard for helping businesses and governments make data-driven decisions. This unrivaled software system, which integrates deeply with existing business systems, helps executives make real-time decisions, saving time and money. Since AIP was launched in April 2023, Palantir stock has become a massive multibagger, surging more than 2,000% (as of this writing).

However, the conversation has changed in recent months, with some insisting that AI is in a bubble and growth has stalled. This has some investors looking for evidence that the AI revolution is alive and well.

Nvidia (NASDAQ: NVDA) just delivered the clearest sign yet that the adoption of AI remains on track.

Image source: Nvidia.

The death of AI has been greatly exaggerated

Some on Wall Street had predicted that Nvidia's financial results would stall, but business actually accelerated. For its fiscal 2026 third quarter (ended Oct. 26), the company generated record revenue of $57 billion, up 62% year over year and 22% quarter over quarter. This drove adjusted earnings per share (EPS) of $1.30, a surge of 60%. The results were partially driven by Nvidia's impressive gross margin of 73.4%.

For context, analysts' consensus estimates were calling for revenue of $55 billion and EPS of $1.26, so Nvidia cleared both hurdles with ease.

The data center segment, which includes processors used for cloud computing, AI, and (as the name implies) data centers, delivered yet another record-setting performance. Segment revenue of $51.2 billion was up 66% year over year and 25% sequentially.

CEO Jensen Huang left no doubt as to what was fueling the results. He noted that sales of the company's AI-centric Blackwell chips were "off the charts," and that the graphics processing units (GPUs) used by cloud operators were "sold out." This helps illustrate that customers are buying up these processors as fast as Nvidia can supply them.

There's more. Management's outlook suggests a further acceleration of sales in the fourth quarter. Nvidia's forecast calls for revenue of $65 billion, representing year-over-year growth of 65%, up from the current quarter's growth rate of 62%. The company is also guiding for its gross margin to expand to 74.8% at the midpoint of its guidance.

Taken together, this suggests that the death of AI is being greatly exaggerated.

What bubble?

Some of the brightest minds in technology and on Wall Street are having a very public debate about the future of AI. Michael Burry, whose bet against mortgage-backed securities was turned into a movie, The Big Short, is the latest to enter the fray, touting the existence of an AI bubble and making a $1.1 billion bet to back up his claim.

Huang has a very different view. During Nvidia's earnings call, the chief executive says, "There's been a lot of talk about an AI bubble. From our vantage point, we see something very different." Huang goes on to say, "The world is undergoing three massive platform shifts at once." They are as follows:

• The transition from CPU- to GPU-accelerated computing
• The advent of generative AI, which is "transforming existing applications while enabling new ones"
• The development of agentic and physical AI systems, which "mark a new frontier of computing"

Huang suggests each of these three fundamentally different shifts will fuel massive infrastructure investments, some of which we've already seen.

Where Palantir comes in

While that's all great news for Nvidia, it also sets the stage for Palantir. The purpose of all this infrastructure spending -- on data centers and cloud computing, for example -- is to enable businesses and governments to put these groundbreaking AI systems to good use. While Nvidia has cornered the market for AI-centric GPUs, Palantir likewise has no equal. Its AIP is unmatched in connecting systems that contain siloed data, aggregating the information in one place, and conducting fundamental analysis. This enables executives to make data-driven decisions in real time.

Palantir's most recent results help illustrate the magnitude of the resulting demand. Third-quarter revenue surged 63% year over year (and 18% quarter over quarter) to $1.18 billion. This powered adjusted EPS of $0.21, up 110%. More telling is the company's total contract value, which soared 151% to a record $2.8 billion, setting the foundation for future growth.

Yet as impressive as those numbers are in their own right, they mask the magnitude of the growth happening under the hood, specifically in Palantir's U.S. commercial segment, which includes AIP. Revenue for the segment surged 121% year over year and 29% sequentially to $397 million, while its customer count jumped 65%, driven by record demand for AIP. Future demand is even more impressive, as the segment's total contract value of $1.3 billion soared 342%. That helped drive Palantir's remaining performance obligation, or contractually obligated sales that haven't yet been delivered, which soared 65% to $2.6 billion.

The biggest challenge facing most enterprise managers and business leaders is that they lack the expertise necessary to implement these game-changing AI solutions while also getting a solid return on investment. Palantir's recent shareholder letter included a host of customer testimonials that show that's precisely what the company is delivering. In fact, Huang said, "This is probably the single most important enterprise stack in the world, the Palantir Ontology." That's high praise from the man whose company is arguably powering the AI revolution.

Palantir's valuation must be taken into consideration. The stock is currently selling for 159 times next year's expected earnings and 61 times next year's expected sales. That said, CEO Alex Karp shared plans earlier this year grow Palantir's revenue by 10 times in the coming years. Given its frantic pace of growth, the company could potentially achieve this milestone within the coming decade.

Palantir may not be the right stock for every investor. For those who want to invest, buying a small position during periods of weakness is one strategy, and employing dollar-cost averaging to gradually expand a stake is another.

To be clear, this is a high-risk, high-reward opportunity. That said, 10 years from now, Palantir stock could be worth much more.

Danny Vena, CPA has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.