First, let’s address the elephant in the room: investors, especially me, are unlikely to forget, Nvidia. The company has come a long way in manufacturing and has become the gold standard for Graphics processing units (GPUs) Used to support artificial intelligence (AI). In fact, I’m as optimistic about the company and its future as ever, and I continue to believe the company has a bright future.
So why would I “forget Nvidia” and double down on other AI stocks instead? It’s about portfolio management. I started accumulating Nvidia stock over six years ago and continued adding to my position until earlier this year. Nvidia shares are up 800% since early last year (as of this writing) and more than 3,300% over the past five years.
As a result of the stock’s parabolic movement, Nvidia is now one of the dominant stocks in my portfolio. It’s now 10 bags, and now represents over 12% of my total holdings. Going forward, I expect Nvidia to do the heavy lifting, and I don’t need to add more capital to a stock that already represents much of my portfolio.
For investors looking for another stock with great potential, I recommend taking a look at it Palantir Technologies (NYSE: BLT). I’ve owned the stock for some time, but earlier this week, I doubled my position in a leading AI company. this is the reason.
Artificial intelligence before the spread of artificial intelligence
Investors may not know that Palantir has a long history of developing artificial intelligence and has been doing so long before the technology became popular last year. The company was founded more than 20 years ago with the idea that artificial intelligence could help the U.S. intelligence community and our allies make better use of existing data.
Intelligence agencies had large amounts of data, but no way to extract the most useful and important tidbits. Palantir has developed sophisticated algorithms and data mining solutions that can trace the trail of breadcrumbs left by aspiring terrorists and piece together details to form a picture that might otherwise be missed.
Palantir serves a broad cross-section 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), but that’s just the beginning. It 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 others.
Once Palantir established itself with government agencies, it turned its attention to commercial companies, where data mining and AI solutions were equally beneficial to businesses. This broad customer base and range of experience gives Palantir an AI pedigree that is difficult to match.
Ready to strike
Palantir’s extensive experience in this area enabled it to pounce when developments in generative AI came on the scene last year. The company was already providing data mining and analytics services to corporate clients, sifting through piles of information and providing actionable intelligence.
In addition to its existing services, Palantir quickly developed its Artificial Intelligence Platform (AIP), which “supports real-time, AI-driven decision making.” For example, AIP can scan sets of sales data to prioritize which customers are most likely to buy. Another example provided by Palantir shows how an AIP helps a manufacturer in the path of an incoming hurricane determine which orders should be expedited, canceled or delayed before the storm hits and the resulting financial impact of those decisions.
Many companies want to harness the power of AI but simply don’t know where to start. For those companies, Palantir created the AIP Bootcamp. “These hands-on, immersive keyboard sessions allow new and existing customers to build live alongside Palantir engineers, all working toward the common goal of deploying AI in operations,” the company said.
Demand has been off the charts, and the success of these workshops has been tremendous, resulting in huge contract wins. Chief Revenue Officer Ryan Taylor explained:
For example, one leading utility company signed a seven-figure deal just five days after completing the training program. Another client immediately signed a paid engagement after just one day of the multi-day training program, and then turned into a seven-figure deal three weeks later.
Palantir saw a surge in its U.S. commercial revenue, which grew 70% and 40% year-over-year in the fourth and first quarters, respectively. The company can barely keep up with the increasing demand for its training camps, resulting in even stronger business results.
A bit of context
As I mentioned at the beginning, I still think Nvidia has a long way forward. However, the opportunity represented by AI software is interesting. The market is expected to grow from $1.49 billion in 2022 to $280 billion by 2032, or an overall growth of 18,647%. Palantir is one of the few companies with the resources and experience to capitalize on this opportunity now While I let the competition scramble.
Palantir recently achieved its sixth consecutive quarter of profitability. The most commonly used valuation metrics suggest the stock is overvalued by 212 times earnings and 25 times sales, but these metrics fail to take into account the company’s impressive growth rate. When measured using the price/earnings-to-growth (PEG) ratio, Palantir’s multiple hours are less than 1, which is Palantir’s benchmark. Undervalued stock.
These are not just empty words. I put my money where my mouth was and doubled down on my position in Palantir Technologies. Because, in my book, it is A compelling opportunity.
Should you invest $1,000 in Palantir Technologies now?
Before you buy shares in Palantir Technologies, consider the following:
the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks Let investors buy it now… and Palantir Technologies wasn’t one of them. The 10 stocks that made this cut could deliver massive returns in the coming years.
Think when Nvidia I prepared this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $775,568!*
Stock advisor It provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. the Stock advisor The service has More than four times The return of the S&P 500 since 2002*.
*Stock Advisor returns as of June 10, 2024
Danny Vina He has positions at Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has Disclosure policy.
Forget Nvidia: it just doubled another unstoppable artificial intelligence (AI) stock. And here’s why Originally published by The Motley Fool
More Stories
Bank of Japan decision, China PMI, Samsung earnings
Dow Jones Futures: Microsoft, MetaEngs Outperform; Robinhood Dives, Cryptocurrency Plays Slip
Strategist explains why investors should buy Mag 7 ‘now’