First, let me make an important point that is highly unlikely to be forgotten by investors, especially me. NVIDIAThe company has paved the way over the years to become the gold standard for Graphics Processing Units (GPUs) used as the foundation for Artificial Intelligence (AI). In fact, I am more excited about the company and its future than ever before and continue to believe that the company's future is bright.
So why would I “forget Nvidia” and invest in another AI stock instead? It's a matter of portfolio management. I started collecting Nvidia shares over six years ago and continued to build my holdings until earlier this year. Nvidia shares are up 800% since the beginning of last year (as of this writing) and are up over 3,300% over the past five years.
As a result of the stock's meteoric rise, Nvidia is now one of the key holdings in my portfolio. The stock has increased tenfold and now represents over 12% of my total holdings. I expect Nvidia to play a large role going forward and do not see a need to add additional capital to this stock that is already a large part of the portfolio.
For investors looking for another stock with great potential, Palantir Technologies (NYSE: PLTR)I've held this stock for a while, but earlier this week I more than doubled my holdings in this AI pioneer. Here's why:
AI before it became fashionable
Investors may not know that Palantir has a long history of developing AI long before the technology became trendy last year: The company was founded more than 20 years ago with the idea that AI could help U.S. intelligence agencies and allied nations make better use of existing data.
Intelligence agencies had mountains of data, but no way to extract the most useful and important information. Palantir developed advanced algorithms and data-mining solutions that could follow the trail left by would-be terrorists and piece together the details to paint a bigger picture that might otherwise be missed.
Palantir serves a wide range of US intelligence and law enforcement agencies, including the Federal Bureau of Investigation (FBI), the Central Intelligence Agency (CIA), the Department of Homeland Security (DHS), and the National Security Agency (NSA), and that's just the beginning. The company also works with the Centers for Disease Control and Prevention (CDC), various branches of the US military, the National Center for Missing and Exploited Children, and many other organizations.
After establishing business with government agencies, Palantir turned its attention to the enterprise business, as its data mining and AI solutions are just as useful to businesses. This broad customer base and breadth of experience gives Palantir an AI track record that is second to none.
Ready to attack
Palantir's deep experience in the field enabled it to jump on the bandwagon when advances in generative AI began to pick up steam last year: The company was already offering data mining and analytics services to enterprise clients, sifting through reams of information to deliver actionable intelligence.
Beyond its existing services, Palantir quickly developed an artificial intelligence platform (AIP) that “powers real-time, AI-driven decision-making.” For example, an AIP can scan vast amounts of sales data to prioritize customers who are most likely to buy. In another example, Palantir described how an AIP could help a manufacturer in the path of a hurricane decide which orders to expedite, cancel, or postpone before the storm hits, and the financial impact of those decisions.
Many businesses want to harness the power of AI but don't know where to start. For them, Palantir came up with AIP Bootcamps. “In these immersive, hands-on keyboard sessions, new and existing customers can build live alongside Palantir engineers, working toward a shared goal of bringing AI to their operations,” the company said.
Demand has been tremendous and the success of these workshops has been phenomenal, leading to major contract wins. Chief Revenue Officer Ryan Taylor explains:
As an example, a large utility company signed a seven-figure contract just five days after completing the bootcamp. Another customer quickly signed a paying contract just one day after a multi-day bootcamp and converted it to a seven-figure contract three weeks later.
Palantir saw strong growth in U.S. commercial revenue, up 70% and 40% year-over-year in the fourth and first quarters, respectively. The company has barely been able to meet the surge in bootcamp demand, which has led to stronger results.
A little background
As I said at the beginning, I still think Nvidia has a long way to go. That said, the opportunity that AI software presents is compelling. The market is expected to grow from $1.49 billion in 2022 to $280 billion by 2032, a total growth rate of 18,647%. Palantir is one of the few companies with the resources and experience to capitalize on that opportunity. right now Meanwhile, competitors are in disarray.
Palantir recently achieved six consecutive quarters of profitability. By the most commonly used valuation metrics, the stock is expensive at 212 times earnings and 25 times sales, but these metrics don't take into account the company's impressive growth rate. Measured by the price-to-earnings growth (PEG) ratio, Palantir's multiple is less than 1, which is the norm for profitable companies. Underrated stock.
These aren't just empty words: I stand by my words and doubled down on my investment in Palantir Technologies because to me, this is a compelling opportunity.
Should you invest $1,000 in Palantir Technologies right now?
Before buying Palantir Technologies stock, consider the following:
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Danny Vena invests in Nvidia and Palantir Technologies. The Motley Fool invests in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Forget Nvidia: I doubled down on another unstoppable artificial intelligence (AI) stock. Here's why was originally published by The Motley Fool.
