Should You Forget Palantir and Buy This Artificial Intelligence (AI) Stock Instead?

Palantir Technologies has become one of the hottest names in artificial intelligence (AI) because it has built a platform that makes AI more useful for enterprises.

Its Artificial Intelligence Platform (AIP) takes all the data an organization has scattered across different systems, organizes it around real-world assets and workflows, and feeds it into third-party large language models (LLMs) so that the results are more actionable. Companies across multiple industries are using it to solve a wide breadth of problems. In many ways, AIP has turned into an operating system for enterprise AI.

Palantir's growth has not only been strong, but it has also accelerated for eight straight quarters. Last quarter, revenue jumped 48% from a year ago to hit $1 billion.

U.S. commercial sales led the way with revenue nearly doubling, as the company continues to add new customers, while existing customers continue to spend more. This could be seen in its net dollar retention rate of 128%. Its largest customer, the U.S. government, also continues to award it new contracts, which led to revenue growth within its government segment climbing more than 50%.

While Palantir has been hitting on all cylinders, investors have driven up its stock price to unprecedented levels. It now trades at a forward price-to-sales (P/S) multiple of more than 100 times 2025 analyst estimates.

That's not earnings, that's sales, and at that kind of valuation, not topping lofty expectations could send the stock sharply lower. When a stock is priced for perfection, there isn't much room for error.

That's why some investors may want to look toward a company that is slowly becoming a competitor to Palantir while trading at a fraction of its price.

UiPath: A different route at a cheaper price

UiPath (NYSE: PATH) is best known for robotic process automation (RPA), which uses software bots to handle routine and repetitive tasks, but it has started moving well beyond that. The company is betting on what it calls agentic automation, where AI agents, bots, and humans all work together in orchestrated workflows to make better and faster decisions. Meanwhile, it has been lining up major partners to help make this shift real.

UiPath recently announced a spate of collaborations. It is working with Nvidia to bring the chipmaker's Nemotron models and NIM microservices (which accelerate the deployment of AI) into industries where data can't easily leave secure systems, such as healthcare and fraud detection.

It has teamed up with Alphabet to integrate its Gemini models so users can issue voice commands to kick off automation. Another new partnership will connect Snowflake's Cortex AI directly into UiPath's platform so customers can act on data in real time. It also has a ChatGPT connector that lets customers pull advanced LLMs right into their existing processes.

The company's main pitch is that it can be the "Switzerland" of enterprise AI agents. Rather than locking companies into one vendor's AI agents, it lets them pick and choose what they need and have them all work together.

That flexibility could appeal to organizations wary of being tied to a single provider. In other words, UiPath is positioning itself as an alternative way to get many of the same workflow benefits that Palantir delivers.

UiPath saw growth slow as AI started to become mainstream, but its fundamentals are starting to improve again. Its annual recurring revenue (ARR) climbed 11% to $1.72 billion last quarter and beat the high end of guidance. Cloud ARR rose 25% to cross $1 billion, showing that customers are moving more work to the cloud.

Net revenue retention stabilized at 108% after several quarters of slipping, which is a good sign that existing customers are still spending more. Meanwhile, public sector sales that had been frozen earlier in the year have started to come back, and adjusted operating margins improved to 17% from 2% as recent cost cuts filtered through.

Image source: Getty Images

Additionally, more than 450 customers are already building AI agents on its platform, and 95% of new customers are adopting its core RPA products alongside its AI tools. That shows that its new AI tools can be complementary and won't cannibalize its core business.

The valuation difference between UiPath and Palantir is striking. UiPath trades at a forward P/S of roughly 5 based on 2025 revenue estimates, which is a fraction of Palantir's sky-high multiple. UiPath is more of a turnaround story, but so was Palantir a couple of years ago.

Meanwhile, its new collaborations could help kick-start growth. Its the deal with Snowflake that looks particularly interesting, because it is an alternative approach to Palantir that can deliver similar insights using a customer's data.

Geoffrey Seiler has positions in Alphabet and UiPath. The Motley Fool has positions in and recommends Alphabet, Nvidia, Palantir Technologies, Snowflake, and UiPath. The Motley Fool has a disclosure policy.