Palantir Technologies (NASDAQ: PLTR) has been one of the hottest artificial intelligence (AI) stocks on the market in the past couple of years, registering stunning gains of more than 820%, as of this writing, on the back of the company’s rapidly improving credentials in the lucrative market for AI chips.
What’s worth noting is investors who bought Palantir a couple of years ago now hold fat gains despite the recent slide. Palantir’s pullback owing to the tariff-fueled turmoil could entice growth investors to add more of this software specialist’s shares.
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However, Palantir continues to trade at an expensive valuation despite pulling back. It sports a price-to-sales (P/S) multiple of 66 along with a trailing price-to-earnings (P/E) multiple of 410. While Palantir’s forward earnings multiple of 145 points toward a big jump in its bottom line, the multiple is still on the expensive side.
So, Palantir stock isn’t cheap enough for investors to consider buying it right away. Of course, the company could justify its expensive valuation in the long run by clocking phenomenal growth thanks to the huge growth opportunity in the AI software-platforms market. However, the recent slide in AI stocks means that there is another tech giant that seems worth buying hand over fist right now.
Let’s take a closer look at that name.
The broader stock market sell-off and concerns about a potential slowdown in AI infrastructure spending have weighed on Nvidia (NASDAQ: NVDA) stock this year. Shares of the semiconductor giant are down more than 28% in 2025 even though it continues to deliver remarkable growth quarter after quarter. This explains why Nvidia can now be bought at very attractive levels.
The company delivered a terrific year-over-year increase of 130% in its non-GAAP earnings in fiscal 2025 (which ended on Jan. 26). This makes its trailing (P/E) ratio of 33 seem like a bargain when the U.S. technology sector index has an average earnings multiple of 36.
Though Nvidia is expected to face margin challenges from the aggressive ramp-up of its Blackwell AI graphics cards to meet the huge customer demand, analysts still expect a 51% jump in earnings this fiscal year.
However, the chances of Nvidia exceeding Wall Street’s expectations are quite solid thanks to a couple of factors.
First, Nvidia is witnessing “extraordinary” demand for its Blackwell AI graphics cards, as CEO Jensen Huang pointed out on the February earnings conference call. This was evident from the fact that Nvidia sold $11 billion worth of its Blackwell GPUs (graphics processing units) in the previous quarter, making it the fastest product ramp in the company’s history.
Blackwell processors accounted for nearly a third of Nvidia’s data center revenue in the fiscal fourth quarter of 2025, which is impressive considering that they reportedly went on sale in early December last year, which was the second month of the quarter.
The second and most important reason why Nvidia’s growth could top expectations is because of the aggressive ramp in the company’s supply of Blackwell processors. Nvidia has reportedly secured 70% of foundry partner Taiwan Semiconductor Manufacturing‘s advanced chip-packaging capacity for 2025, according to Taiwan-based Economic Daily News.
Importantly, TSMC’s advanced chip-packaging capacity is expected to jump by 30% this year. So, Nvidia should be able to meet the strong demand for Blackwell processors, and that’s probably why the company is expecting to deliver another quarter of solid growth. Nvidia guided for $43 billion in revenue for the current quarter, which would be a big jump of 65% from the year-ago period.
That’s quite impressive considering Nvidia’s huge revenue base. But what’s worth noting is that there is more to Nvidia than AI, which could make this stock a big winner in the long run.
There is no doubt that AI has played a central role in driving Nvidia’s impressive growth in the past couple of years, but there are other emerging growth opportunities that could help it get bigger in the future. For instance, the company’s automotive revenue is on track to accelerate significantly in the current fiscal year as more automotive companies and component manufacturers are set to use Nvidia’s systems to develop autonomous vehicles.
Another significant growth opportunity for Nvidia lies in cloud gaming, a market that’s expected to take off big time in the long run. In all, Nvidia’s long-term addressable market could be around a whopping $1.7 trillion, which means that the company still has a lot of room for growth considering that it generated $130.5 billion in revenue in the previous fiscal year.
All this indicates that investors looking to buy an attractively valued AI stock should take a closer look at Nvidia as its huge addressable market could help restore its mojo and send the company’s shares higher in the long run.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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