One of the biggest concerns for Wall Street’s AI enthusiasts might actually come from within the industry itself.
For nearly three years, no trend on Wall Street has attracted as much attention and investment as artificial intelligence (AI). The idea that software and systems can make quick decisions and enhance efficiency over time without human oversight could transform numerous industries globally.
Arguably, the companies that have gained the most from the AI surge are the top graphics processing unit (GPU) manufacturers, including Nvidia and Palantir Technologies. Since the start of 2023, Nvidia’s market capitalization has surged by more than $4 trillion, while Palantir’s stock price has climbed over 2,700%.
Investors are optimistic that this trend will continue into 2026, but the actions of those closest to Nvidia and Palantir suggest a different narrative.
Nvidia and Palantir: Key Players in the AI Revolution
What distinguishes these two giants is a seemingly robust competitive advantage that’s hard to find in the market.
Nvidia’s GPUs are vital to AI data centers and have become the preferred choice for businesses. Some analysts estimate that these chips account for over 90% of all GPUs used in AI-related data centers.
Moreover, Nvidia’s AI hardware is unmatched in computing capability. Despite rising competition, the company’s three main GPU generations (Hopper, Blackwell, and Blackwell Ultra) outperform others, allowing Nvidia to demand premium prices ranging from $30,000 to $40,000 for each high-end GPU. This has resulted in incredibly high gross margins near the mid-70% range.
Additionally, Nvidia’s CUDA platform—used by developers to unleash the full potential of its GPUs for building and training large language models—reinforces customer loyalty within Nvidia’s ecosystem.
Today’s changes
(3.42%) $6.22
current price
$188.06
Key data points
Market capitalization
$448 billion
daily range
$182.76 – $190.39
52 week range
$63.40 – $207.52
volume
2.2M
average volume
52M
gross profit
80.81%
dividend yield
Not applicable
On the other hand, Palantir Technologies’ AI-driven Gotham and Foundry SaaS platforms don’t have straightforward large-scale alternatives.
Gotham is used by the U.S. government and allied forces for military planning and operations, with many contracts lasting four to five years, offering predictable cash flow. This segment accounts for most of Palantir’s profits.
Foundry, although newer, helps businesses analyze their data and is projected to experience significant revenue growth in the near term.
However, on Wall Street, when something appears too good to be true—even in the realm of AI—it often ends up being just that.
Nvidia and Palantir Insiders: A Cautionary Signal
While every new technology faces potential challenges, perhaps the most significant warning signs regarding AI’s rise are emerging from within these companies.
While investors await optimistic remarks from Nvidia CEO Jensen Huang and Palantir CEO Alex Karp, insiders at both firms are raising eyebrows with their recent activities.
“Insider” indicates management, board members, or anyone holding at least 10% of company shares, often privy to non-public information.
Legally, insiders must file a Form 4 with the SEC within two business days of any stock trading. If an insider buys or sells shares, they need to report it through this filing. Although this process promotes transparency and prevents insider trading, the filings can often reveal much more.
Today’s changes
(-0.65%) $-1.20
current price
$183.77
Key data points
Market capitalization
$446.6 billion
daily range
$182.04 – $185.47
52 week range
$86.62 – $212.19
volume
4.3M
average volume
190M
gross profit
70.05%
dividend yield
0.02%
As of December 5, insiders have shown a notable trend in selling off shares in both Nvidia and Palantir. Here’s the breakdown of net sales:
- Nvidia: Insiders sold a total net of $5.4 billion in stock.
- Palantir Technologies: Insiders sold a total net of $7.2 billion in stock.
In total, insiders have divested around $12.6 billion worth of their shares since early December 2020.
It’s important to note that not all insider selling is inherently negative. Many executives at Nvidia and Palantir receive a considerable portion of their pay in stock and options. To manage the taxes that arise from this compensation, insiders typically offload some of their stocks. Such tax-driven sales shouldn’t necessarily alarm investors.
What raises more concern is the apparent hesitance of insiders to buy more shares. Over the last five years, no senior executive or board member at Nvidia has made any stock purchases. In contrast, Palantir insiders have bought about $1.16 million in shares since going public on September 30, 2020.
This signals that insiders may believe the current stock valuations are unappealing.
While valuations are subjective, history indicates that it can be tricky to judge Nvidia and Palantir’s current prices within an already pricey stock market. Historically, mega-cap companies that are trendsetters have struggled to maintain price-to-sales ratios exceeding 30 over the past three decades, serving as a warning sign for potential market bubbles.
Just to illustrate, before announcing its fiscal third-quarter results in November, Nvidia’s price-to-sales ratio hovered above 30. Palantir’s trailing twelve-month ratio is currently at a staggering 119, which is hard to believe. Neither of these AI champions are demonstrating sufficient sales or profit growth to justify such high valuations.
There’s also a chance that history could repeat itself by 2026. Since the mid-1990s internet boom, every major new technology has faced a bubble burst. In essence, investors tend to have unrealistic expectations about the adoption and utility of cutting-edge technologies, often leading to unmet high hopes.
If an AI bubble does form and subsequently burst, Nvidia and Palantir stocks are likely to experience significant downturns.
