Palantir vs. Nvidia: Which Stock Will Outperform in 2026?

Two companies that have benefited the most from the artificial intelligence (AI) boom are Palantir Technologies (NASDAQ: PLTR) and Nvidia (NASDAQ: NVDA). Palantir is establishing itself as a leader in becoming an AI operating system, and Nvidia is the dominant chipmaker fueling the AI infrastructure buildout.

While both stocks have been massive outperformers the past few years, let's see which one is the best to own going into 2026.

Image source: Getty Images.

The case for Palantir

The market loves growth, and it loves accelerating growth even more. That is one of the reasons why Palantir's stock has performed so well over the past few years. The company's revenue growth has accelerated for nine consecutive quarters, culminating in 63% revenue growth in Q3.

Palantir's growth is being led by the increasing adoption of its AI platform in the U.S. commercial sector. AIP is designed to make AI more applicable in the real world. It does this by gathering a customer's data from a variety of sources and then organizing it into an ontology that links the data to real-world assets and processes. This cleans and structures the data to help eliminate AI hallucinations, making large language models (LLMs) more useful.

AIP is seeing explosive growth, with Palantir both quickly adding new customers and seeing existing customers meaningfully expand their usage. This was on display last quarter when it increased its customer count by 45%, while its net dollar retention came in at 134%. This metric only measures customers who have been with the company for more than a year, and any number greater than 100% indicates expansion. Meanwhile, Palantir's U.S. commercial revenue soared 121% in the quarter, while its total U.S. commercial contract value surged 342%.

AIP is being tapped for a wide breadth of use cases across industries, which gives it a long runway of growth ahead. Meanwhile, the company is also seeing strong growth in its government segment, as both the U.S. and U.K. governments continue to embrace AI.

The one big knock on Palantir is valuation, with the stock trading at a forward price-to-sales (P/S) multiple of nearly 69 times 2026 analyst estimates.

The case for Nvidia

The company that has benefited most from the AI boom has been Nvidia. Its revenue is up nearly tenfold over the past three years, and it just grew its revenue by 62% in Q3 to $57 billion. That type of growth for a company the size of Nvidia is almost unheard of, and best of all, it still has a long runway of growth in front of it.

Nvidia has become the king of AI infrastructure, as its graphics processing units (GPUs) are the main chips used to power AI workloads. Meanwhile, the company has created a wide moat around its business through its CUDA software platform and NVLink interconnect system.

After developing CUDA in 2006, Nvidia smartly seeded the software platform into universities and research labs that were doing the early work on AI, leading to most foundational AI code being written on its software and optimized for its chips. Meanwhile, NVLink is a proprietary interconnect that allows its GPUs to quickly communicate with each other, essentially letting them act as one powerful unit. This creates a lock-in effect, as mixing and matching AI chips would be sub-optimal.

With AI infrastructure spending still ramping up, Nvidia is well-positioned to continue to capture much of the spending on AI data centers.

The verdict

While Palantir may have the better long-term business model given its recurring nature, for 2026, I'm going to give the edge to Nvidia. AI infrastructure spending is still ramping up and looks to be in its early innings, and Nvidia remains the prime beneficiary.

However, it is valuation that ultimately sways me to Nvidia. The stock is still reasonably valued given its growth, trading at a forward price-to-earnings (P/E) ratio of under 24.5 times 2026 analyst estimates and a price/earnings-to-growth (PEG) ratio below 0.7 times (with less than 1 considered undervalued). That's a big difference compared to Palantir, which is trading at 69 times its projected 2026 revenue.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.