Overview: 

• NVIDIA leads the AI hardware market with $130.5B annual revenue and dominant AI chips powering global data centers.

• Palantir delivers faster growth at 70% YoY, with 61% projected revenue expansion in 2026.

• Profit-earning depends on scale and acceleration. NVIDIA offers stability, while Palantir provides higher percentage potential.

NVIDIA and Palantir are both high-growth AI stocks, but the gap between the two is massive. NVIDIA’s current market capitalization is nearly $4.45 trillion, while Palantir’s is close to $313 billion, making the GPU-maker 14 times larger. This difference matters when you think about upside potential. 

A company worth over $4 trillion has to add hundreds of billions in value just to move the stock meaningfully. However, a $313 billion company can generate stronger percentage gains with a much smaller absolute increase in earnings or cash flow.

When it comes to valuation, Palantir trades at a price-to-earnings ratio above 200x and a forward P/E near 110x, suggesting high expectations for future growth. NVIDIA also has increased valuation, but it’s backed by larger profits and free cash flow.

Revenue Scale and Growth Rates

NVIDIA’s financial scale in the AI hardware market is massive. The company generated a total revenue of $130.5 billion in fiscal 2025. The Q4 revenue alone reached $39.3 billion, with $35.6 billion in data center sales. This indicates that AI-focused data center products contributed to 86% of quarterly revenue. Data center revenue grew 93% year over year, showing that hyperscale cloud providers and enterprise buyers are investing in AI.

Palantir operates at a much smaller revenue base but with faster percentage growth. The firm reported 70% year-over-year revenue growth during Q4 of 2025. Management issued guidance for fiscal 2026 calling for 61% revenue growth, with US commercial revenue projected to grow by 115%. These figures highlight a bullish forecast, especially in private-sector contracts, although total revenue is far below NVIDIA’s scale.

Profitability and Margins

NVIDIA combines high growth with strong profitability. Gross margins have stayed above 60%, driven by demand for advanced AI chips and networking products. The company generates substantial net income and free cash flow, giving it financial flexibility to invest in research, supply chain expansion, and next-generation architectures. Its balance sheet is also solid, which supports continued expansion in a competitive market.

Palantir’s profitability received mixed reaction from investors. The company has improved operating performance and reported positive adjusted earnings, but GAAP profitability is limited compared with NVIDIA. Significant spending on research, product development, and sales expansion continues. Investors are therefore pricing in future margin expansion rather than current large profits, which makes the valuation more sensitive to execution risks.

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Recent Developments and Industry Position

NVIDIA announced a multi-year AI infrastructure partnership with Meta in early 2026. This type of agreement could translate into billions of dollars in GPU and networking sales over time. Demand from hyperscalers is strong, as large language models and AI training workloads require increasingly powerful hardware clusters. These trends support long-term visibility for revenue growth.

Palantir’s recent contract wins include defense and healthcare partnerships, along with a $7.6 million defense contract for ICT system platforms. While these agreements support steady growth, individual contract values are generally smaller than the multi-billion-dollar hardware commitments seen in NVIDIA’s ecosystem. The company’s strategy involves expanding existing customer relationships.

Risk Factors and Capital Sensitivity

The primary risk for NVIDIA is valuation sensitivity. With a market cap above $4.45 trillion, even a modest slowdown in AI spending could pressure the stock. Some institutional investors reduced positions in late 2025, showing concerns about dependence on GPU cycles and focused demand. Expectations are high, leaving little room for disappointment.

Palantir faces execution risk. Its growth depends on winning large contracts, particularly in government sectors. Customer concentration is still a factor. With valuation multiples above 200x trailing earnings, any slowdown in revenue growth could lead to volatility. The stock could react quickly if results or guidance fall short.

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Upside Potential in 2026

If NVIDIA were to rise another 10%, the company would need to add nearly $445 billion in market value. A 20% gain would require close to $890 billion in additional capitalization. Investors would also need to maintain confidence in AI infrastructure spending.

If Palantir plans to raise its profit by 20%, it would need an additional $63 billion in value. Given the projected 61% revenue growth in 2026, the percentage upside is easier to achieve if execution stays strong and margins improve. However, higher volatility can push prices in both directions.

Final Assessment

NVIDIA represents scalability, strong profitability, and proven AI infrastructure leadership. However, its higher valuation limits percentage upside compared to peers. Palantir provides faster growth and potentially higher percentage returns, but with increased volatility and reliance on contract expansion. The balance between stability and growth will decide which stock generates more profits.

FAQs

1. Why is NVIDIA considered the leader in AI hardware?

NVIDIA controls a major share of the AI chips market, generating $35.6B in quarterly data center revenue alone.

2. What makes Palantir attractive despite being smaller?

Palantir is experiencing significant growth, with 70% year-over-year revenue growth and robust commercial expansion.

3. Which stock has higher percentage upside potential in 2026?

Palantir may offer higher percentage gains due to its smaller $313B market cap.

4. Which company is more profitable today?

NVIDIA is significantly more profitable, with gross margins above 60% and strong free cash flow.

5. What is the biggest risk for each stock?

NVIDIA faces valuation risk due to its $4.45T size, while Palantir faces execution and contract concentration risk.