Nvidia (NASDAQ: NVDA) inventory has been a monster winner in recent times as the synthetic intelligence (AI) revolution has taken off. Since January 2020, it has surged by round 1,780%! Not too long ago although, one other AI inventory has been getting a lot of consideration — Palantir Applied sciences (NASDAQ: PLTR).

The features for Palantir have additionally been explosive — up 1,370% in simply two years!

But Palantir’s $256bn market cap right this moment is roughly the place Nvidia’s was in 2020. This makes Nvidia, now a $2.77trn colossus, about 11 instances bigger than Palantir.

So, might shopping for the inventory be like investing in Nvidia just a few years again? Right here’s my take.

Uber-bullish bosses

I see just a few similarities between the 2 tech firms. The obvious is that each are on the centre of the AI increase, though in several methods. Nvidia gives the important {hardware} — the GPUs — that energy AI fashions, whereas Palantir delivers the software program platforms that assist organisations harness AI at scale.

To present an analogy, if Nvidia is offering the picks and shovels for the AI gold rush, then Palantir helps others flip that uncooked gold into one thing helpful by way of its Synthetic Intelligence Platform (AIP). That is actually powering the smaller firm’s development proper now.

Past this, it’s value noting that each companies are led by founder-CEOs, with Jensen Huang at Nvidia and Alex Karp at Palantir. They’ve a method of stirring the creativeness with regards to AI.

For instance, in Might 2024, Huang declared: “The next industrial revolution has begun…AI will bring significant productivity gains to nearly every industry.”

In the meantime, again in November, Karp stated: “This is the software century, and we intend to take the entire market.”

One is rising sooner

On 5 Might, Palantir reported income of $884m, representing 39% year-on-year development, and a doubling of internet revenue ($214m). For the total 12 months, administration expects income of about $3.9bn (or 35% development).

After all, that is spectacular. Income in its US industrial phase grew by 71% in Q1. That is very encouraging for shareholders as a result of as soon as new clients signal on, they have a tendency to remain locked into Palantir’s highly effective, AI-driven software program ecosystem for a few years.

What about Nvidia? Properly, in This fall, the AI chip chief reported income of $39.3bn, which was 78% larger than the 12 months earlier than. In the meantime, internet revenue surged 80% to $22.1bn.

Due to this fact, regardless of being many instances bigger, Nvidia has really been rising its high line a lot sooner than Palantir. In Q1, which is ready to be reported on 28 Might, Nvidia’s income is anticipated to have grown 65% to round $43.1bn.

One is less expensive

Astonishingly, Palantir inventory trades at 87 instances gross sales and 196 instances ahead earnings. These respective metrics are 21.5 and 26 for Nvidia, regardless of it rising sooner.

This tells me that Palantir shares look wildly overvalued, and current lots of danger if the agency’s development price immediately tails off. Worldwide industrial income really fell by 5% in Q1, largely as a consequence of underperformance in Europe, which Karp stated “doesn’t quite get AI”.

The identical danger applies to Nvidia too, in relation to spending on AI chips, however the start line when it comes to valuation is far decrease.

Except Palantir’s development immediately accelerates, I don’t assume shopping for its inventory right this moment can be like investing in Nvidia in 2020.