Skip Palantir: Top 2 AI Stocks to Buy Instead Now

Key Investment Considerations for AI Stocks

Palantir Technologies possesses an exceptional product lineup and a robust foundational business model. However, its current valuation raises significant red flags for potential investors. In stark contrast, Nvidia stands out with a more reasonable pricing structure and is strategically positioned to sustain its impressive growth trajectory moving forward. Meanwhile, Advanced Micro Devices emerges as a formidable competitor to Nvidia, particularly with the anticipated rollout of its MI400 series chips.

Why Consider Alternatives to Palantir in the AI Space

Similar to Palantir, both Nvidia and Advanced Micro Devices are experiencing explosive growth within the artificial intelligence sector. What sets them apart, however, is their valuation metrics, which do not assume flawless execution or unattainable perfection from their operations. Palantir Technologies has boldly positioned itself as a unique player, often described internally as an ‘n of 1’ entity. Yet, its stock performance earlier this year prompted a sharp reversal, leading some to jokingly refer to it as an ‘n of negative 1’ due to the downturn.

Even after this notable decline in share price, Palantir’s valuation continues to hover at extraordinarily high levels. Specifically, its shares are currently exchanging hands at 128 times the projected forward earnings. This premium pricing prompts a critical question for investors: is it wiser to pivot away from Palantir and redirect capital toward two other promising artificial intelligence stocks that offer better risk-reward profiles?

Nvidia’s Positioning for the Upcoming Rubin Platform Launch

Unlike the lofty multiples seen in Palantir, Nvidia’s stock does not appear overinflated by any stretch. Trading at a forward earnings multiple of just 24.5, the company presents a compelling case, especially when factoring in its expansive growth opportunities ahead. This valuation level is far from intimidating and aligns well with the semiconductor leader’s dominant market position.

Nvidia’s momentum is expected to persist strongly, fueled by the scheduled introduction of its innovative Rubin platform in the latter half of 2026. This next-generation architecture promises groundbreaking advancements, including support for inference operations at costs potentially as much as 10 times lower than those of the already triumphant Blackwell GPU series. Furthermore, Rubin is engineered to facilitate the training of enormous mixture-of-experts models, achieving this efficiency with up to four times fewer GPUs required compared to previous generations.

Concerns about a potential burst in the AI investment bubble have circulated among market watchers. However, Nvidia’s Chief Executive Officer, Jensen Huang, addressed this directly in a November statement, asserting, ‘From our vantage point, we see something very different.’ This perspective resonates strongly, as the insatiable demand for high-performance AI chips appears poised to expand indefinitely rather than contract. Nvidia, with its cutting-edge technology and ecosystem dominance, is primed to capture the lion’s share of this burgeoning market opportunity.

Advanced Micro Devices as Nvidia’s Strongest Contender

For those seeking exposure to graphics processing unit investments, Advanced Micro Devices merits serious consideration as Nvidia’s most viable and credible rival. Although AMD’s shares trade at approximately 32 times forward earnings—a figure that is elevated—it still represents a relative bargain when juxtaposed against Palantir’s sky-high multiples.

AMD’s forthcoming Instinct MI400 chips are designed to deliver intense competition directly to Nvidia’s Vera Rubin offerings. These chips are projected to deliver equivalent compute performance and memory bandwidth, while surpassing Rubin with 1.5 times greater memory capacity and 1.5 times the scale-out bandwidth capabilities. This technical edge could prove pivotal in winning over major clients.

Major AI hyperscalers, the enormous data center operators driving much of the industry’s demand, are increasingly wary of over-reliance on a single supplier like Nvidia. This diversification imperative plays directly into AMD’s strengths. Analysts anticipate that once the MI400 chips become commercially available, AMD’s stock will reclaim and accelerate the remarkable upward trajectory it enjoyed throughout the prior year.

Software Powerhouses Versus Silicon Innovators: A Comparative Analysis

In most scenarios, software solutions tend to outpace hardware innovations in long-term battles for market supremacy, thanks to their scalability, recurring revenue models, and lower capital intensity. This dynamic holds true particularly when valuations are comparable across competitors. Palantir undeniably offers a superior product suite, backed by rapid revenue expansion and a solid operational foundation. Regrettably, its equity is valued as if the company will execute without any missteps indefinitely—a standard no enterprise can realistically maintain over extended periods.

Nvidia and AMD, on the other hand, stand to reap substantial rewards from the unrelenting surge in demand for advanced GPUs. Crucially, neither needs to perform flawlessly to generate returns that surpass broader market benchmarks. Their business models are anchored in tangible hardware advancements that address real-world computational bottlenecks in AI development and deployment.

Market Data Snapshot for Nvidia

As of recent trading, Nvidia boasts a staggering market capitalization of $4.4 trillion. The stock experienced a daily decline of 2.21%, equivalent to $4.13 per share, closing at $182.81 on February 13, 2026, at 3:58 PM ET. Key metrics include a day’s range from $181.59 to $187.55, a 52-week range spanning $86.62 to $212.19, trading volume of 5.4 million shares against an average of 180 million, gross margins at 70.05%, and a minimal dividend yield of 0.02%.

Market Data Snapshot for Advanced Micro Devices

Advanced Micro Devices holds a market cap of $338 billion. It saw a positive change of 0.67%, or $1.38, closing at $207.32. The day’s range was $203.88 to $210.05, with a 52-week spectrum from $76.48 to $267.08. Volume reached 26 million shares compared to an average of 37 million, with gross margins at 45.99%.

Strategic Implications for AI Investors

The interplay between software-centric firms like Palantir and silicon-focused giants such as Nvidia and AMD highlights a pivotal investment theme. While Palantir’s platform excels in data analytics and AI-driven decision-making, its valuation discounts any potential hurdles in scaling or market saturation. Conversely, the hardware providers benefit from structural tailwinds in AI infrastructure buildout, where demand shows no signs of abating. Investors would be prudent to weigh these factors carefully, prioritizing opportunities where growth potential aligns more realistically with pricing.

In summary, while Palantir remains a noteworthy contender, its premium pricing warrants caution. Nvidia and AMD offer more grounded entry points into the AI revolution, with technological roadmaps that promise sustained leadership and profitability. Diversifying into these silicon powerhouses could provide a balanced approach to capturing AI’s transformative potential without overexposure to perfection-priced assets.