Prediction: 2 Brilliant Stocks That Will Be Worth More Than Palantir Technologies by Year's End in 2026

Palantir (NASDAQ: PLTR) has been one of the biggest winners in the artificial intelligence (AI) arms race over the past few years. The stock has been on an absolute tear and has risen by more than 2,600% since the start of 2023.

However, not all of those returns are from business gains, and the stock has gotten a bit overheated.

Currently, Palantir sports a $420 billion market cap (at the time of this writing), which places it inside the top 25 largest companies in the world. I think there will be some other companies that surpass Palantir's market cap by the end of 2026. Two stocks that I think will do it are ASML (NASDAQ: ASML) and AMD (NASDAQ: AMD). These two aren't far behind Palantir, but by the end of next year, I think they will far exceed Palantir's market cap.

Image source: Getty Images.

Palantir's stock may be the most expensive in the market

Palantir's artificial intelligence-powered data analytics platform is incredible software. It is used by government and commercial clients to make sense of data inflows and allow users to make the most informed decisions. It also has generative AI agents, which can automate some tasks that humans normally do.

Palantir's software is seeing strong growth, and those who adopt it are quick to report success stories. This goes to show how impressive a product Palantir has.

The problem is, the stock and the business have uncoupled themselves, and Palantir's stock trades for a jaw-dropping 277 times forward earnings.

PLTR PE Ratio (Forward) data by YCharts

That's an out-of-control valuation, and investors must understand what growth that projects. Should Palantir grow its revenue at a sustained 50% pace over the next five years and achieve a 35% profit margin, it would still trade at 46 times 2030 earnings.

Now, 46 times 2030 earnings is a huge premium to pay on the stock, and Palantir will spend the better part of the next five years growing into its valuation. The market might even grow impatient with it and sell off the stock due to the high valuation, which opens the door for AMD and ASML to surpass Palantir.

AMD and ASML rightfully deserve to be worth more than Palantir

AMD and ASML are not far behind Palantir's valuation. AMD has a market cap of $378 billion, and ASML's is at $400 billion. Both companies are also involved in the AI arms race, so it's not out of the question that some investment dollars that were previously tied up in a Palantir investment could flow to either of these two.

ASML makes extreme ultraviolet (EUV) lithography machines that lay the microscopic electrical traces on chips. There is no other company in the world that has this technology, giving ASML a technological monopoly on these machines. This ties ASML's performance to the demand for chips, and with increased chip capacity required to build AI infrastructure, ASML could have a solid few years. With only $20 billion to go to surpass Palantir, I wouldn't be surprised if it can pass Palantir's market cap soon.

AMD has played second fiddle to the undisputed king of AI computing technology, Nvidia. However, recent contract wins by AMD allowed it to reemerge as an viable alternative to Nvidia's graphics processing units (GPUs). A lot of these announcements are just that, announcements. It will be 2026 before investors see some of these deals start to affect AMD's finances. However, if these massive chip deals come to fruition, it could massively boost AMD's finances and allow it to surpass Palantir's market cap.

Regardless of how either of these investment theses shakes out, both AMD and ASML are much more reasonable on a price-to-forward earnings basis than Palantir.

AMD PE Ratio (Forward) data by YCharts

While neither is necessarily cheap, they have big business wins coming down the pipeline, and that could make both stocks' valuations more reasonable.

I think ASML and AMD will both be valued at a higher level than Palantir by the end of 2026, and each stock looks like a solid investment pick right now.

Keithen Drury has positions in ASML and Nvidia. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.