Key Takeaways
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Palantir has recently posted solid quarterly profits and adjusted its full-year outlook upward.
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Both Palantir and Nvidia are gaining from the surge in artificial intelligence.
After reviewing the latest earnings report, one might expect Palantir Technologies’ stock to soar. The company announced revenue exceeding analysts’ estimates, increased its forecast for the year, and noted a boost in demand. Their software is attractive to customers wanting to incorporate artificial intelligence (AI) quickly and efficiently into their operations.
Yet, after the report on November 3, Palantir’s stock took a hit—dropping nearly 8% in subsequent trading, marking a total decline of about 16%. This raises a question: with Nvidia’s earnings coming soon, is Palantir’s recent experience a cautionary tale for Nvidia investors?
Palantir’s stock has seen a dip even after a favorable earnings report, which is puzzling. Why draw parallels between Nvidia and Palantir? Both firms have enjoyed notable revenue growth, contributing significantly to the ongoing AI boom. Over the past three years, Palantir’s stock has surged by 2,000%, while Nvidia follows closely behind at 1,100%.
Nvidia is set to announce its third-quarter fiscal 2026 results on November 19, and there are reasons to feel hopeful. Historically, Nvidia has often exceeded analyst expectations. Additionally, recent feedback from customers, including major cloud service providers like Amazon and Alphabet, indicates a rising demand for computational power as they ramp up their AI capabilities.
This suggests a strong third quarter for Nvidia. CEO Jensen Huang recently hinted at substantial orders for the company’s AI platform, estimating total shipments for 2026 could reach $500 billion.
However, could Nvidia’s stock also slump despite good news? It’s vital to recognize that factors surrounding Palantir and Nvidia differ. Palantir’s valuation is concerning, trading at over 230 times its future revenue forecasts, compared to Nvidia’s more manageable 40 times. While Nvidia remains competitively priced, Palantir is viewed as expensive, which may be contributing to its stock struggles amid fears of a potential AI bubble.
So, even with impressive earnings, some investors may choose to take profits, while others are hesitant to purchase shares at current valuations. Nvidia’s stock is not particularly cheap, but it is valued reasonably based on its growth and future potential, meaning that high valuations may not drive investors away.
However, given Nvidia’s robust long-term results, some shareholders might opt to reduce their positions to secure profits, even if upcoming earnings look promising. History shows that strong earnings reports don’t necessarily translate into stock price increases.
For investors, Nvidia’s short-term performance post-earnings shouldn’t sway your views on the company’s outlook. Long-term holders shouldn’t let brief fluctuations affect their portfolio. This is reassuring since it allows you to focus on more significant factors rather than the daily stock price changes—considering the long-term growth of your investments instead.
Is Now the Right Time to Invest $1,000 in Nvidia?
Before diving into Nvidia stock, keep the following in mind:
Analysts from Stock Advisor have pinpointed stocks they believe are better investment opportunities right now—Nvidia is not on that list. These alternatives could yield strong returns in the coming years.
For example, an investment in Netflix, recommended in December 2004, would have grown to nearly $600,000 by now, while a similar investment in Nvidia, suggested in April 2005, would be worth over $1 million today.
It’s worth noting that Stock Advisor boasts an average return of 1,035%, outpacing the S&P 500’s 191% over the same period. Consider joining to access the latest top stock picks and not miss out.
The views here are personal and don’t necessarily represent those of any organization.
