Experts in artificial intelligence (AI) and data mining have provided strong indications that the AI revolution is still very much alive and thriving.
Nvidia has made a notable resurgence in recent years. Initially known for its graphics processing units (GPUs) that transformed the gaming sector, the company now stands at the forefront of data centers, acting as a catalyst for the current boom in AI. With substantial sales and profit growth, Nvidia’s market capitalization has exploded over 13 times, reaching $5 trillion—marking the first company to hit this milestone.
However, concerns have emerged lately that while AI adoption is still impressive, its relative pace may be starting to decelerate. Investors are keen on finding solid indicators that the AI revolution is progressing smoothly as more companies integrate these advanced algorithms into their operations.
Palantir Technologies has presented compelling evidence that AI remains in its early stages.
Strong Performance
Expectations were high regarding Palantir’s financial results, and the data mining and AI firm delivered. For the third quarter, revenue reached $1.18 billion, a 63% increase compared to last year and an 18% rise from the previous quarter. This resulted in adjusted earnings per share (EPS) of $0.21, reflecting a 110% increase.
Analysts had forecasted lower figures for revenue, estimating around $1.09 billion and an adjusted EPS of $0.17, so Palantir certainly exceeded expectations.
A standout feature was the performance of Palantir’s U.S. commercial division, which is home to its main artificial intelligence platform (AIP). Revenue in this segment surged for the ninth consecutive quarter, soaring by 121% to $397 million and 29% sequentially. Additionally, customer roles in this division jumped by 65%, indicating an influx of new users to AIP, leading to a staggering 342% rise in total contract value (TCV) to a record $1.3 billion.
What’s perhaps even more notable is Palantir’s future business outlook. The company’s remaining performance obligations (RPOs)—essentially revenue from contracts yet to be recognized—rose by 66% to $2.6 billion, indicating a solid foundation for future growth.
AI Landscape Today
While this is undoubtedly encouraging for Palantir investors, these results carry significant implications for the broader AI industry, likely affirming insights gathered last week.
At Nvidia’s recent GPU Technology Conference (GTC), CEO Jensen Huang announced that the backlog for their Blackwell and next-gen Rubin chips had reached “$5 trillion so far.” This number far surpassed Wall Street’s most optimistic projections and took many investors by surprise.
Statements from major tech firms—including Amazon, Microsoft, Alphabet, and Meta Platforms—underscore why this is happening. Collectively, they are projected to spend $380 billion on capital expenditures (Capex) this year alone, largely directed towards data centers to meet the growing demand for AI, with plans to increase spending further by 2026.
Looking at the bigger picture, Palantir’s outcomes suggest that AI adoption is expanding beyond just tech leaders. It’s gradually becoming more mainstream, as demonstrated by Palantir’s accelerating performance. As more large enterprises get involved in the AI movement, a greater number of them will need to develop their infrastructure with AI-capable chips, which will also benefit Nvidia.
The results from Palantir, alongside Nvidia’s substantial backlog, challenge the recent narrative of a slowdown in AI adoption. The reality seems to indicate that, if anything, the demand for AI is intensifying.
According to IoT Analytics, Nvidia commands a dominant 92% share of the data center GPU market. As AI pushes beyond data centers, Nvidia is in an advantageous position to capitalize on this trend, given that its chips are regarded as the benchmark for both training and inference stages of AI.
Since the AI boom began in early 2023, Nvidia’s stocks have skyrocketed by 1,320%, consistently reaching new peaks. Currently priced at 31 times the projected earnings for next year, Nvidia’s stock valuation is certainly at a high point. However, I’d argue that this price is reasonable, considering the company is anticipated to grow its earnings by 27% annually over the next five years.
Nvidia is solidifying its position in the competitive landscape of the AI revolution. Despite the remarkable increases in its stock price over recent years, emerging evidence suggests it still has significant growth potential ahead.
