Companies were trialing with artificial intelligence (AI) in 2023, adopted the technology in 2024, and are now gearing up for disruptive changes in their AI operations. 

President Trump also rolled out a significant AI infrastructure investment of $500 billion, a shot in the arm for the leading tech players. The market size for AI worldwide, meanwhile, is estimated to reach $243.7 billion this year from $184.1 billion last year, per statista.com. 

Banking on such positives, the future looks brighter for AI stocks. Two standouts in the S&P 500 last year were NVIDIA Corporation NVDA and Palantir Technologies Inc. PLTR, poised for strong performance again this year, making them enticing buys. Let’s see why – 

The Bullish Case for NVDA Stock

NVIDIA’s dominance in the graphic processing units (GPU) market has given the AI behemoth a competitive advantage. NVIDIA accounts for more than two-thirds of the GPU market, which is projected to grow to $101.54 billion this year from $75.77 billion last year, according to Precedence Research. 

The growing acceptability of NVIDIA’s chips also stands in good stead for the company. The demand for NVIDIA’s next-generation Blackwell chips is surging, while the demand for Hopper chips remains steady, confirmed CEO Jensen Huang. 

NVIDIA’s older and newer chips continue to gain customers’ confidence due to their superior quality compared to competitors Intel Corporation INTC and Advanced Micro Devices, Inc. AMD. The Blackwell chip, in particular, can run AI inference at a 30 times faster pace compared to the older chips and has seen a significant rise in shipments in the current quarter. The Blackwell chips are also 25 times more energy efficient, which does lower costs. 

Due to the growing demand for Blackwell chips, it is expected that NVIDIA will continue to witness a healthy increase in quarterly profits despite considerable gains last year. Therefore, NVDA’s earnings per share (EPS) are projected to increase by 46.3% from last year. The Zacks Consensus Estimate is $2.94.

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The Bullish Case for PLTR Stock

In the AI platform software market, Palantir has the second-biggest share behind Microsoft Corporation MSFT. With spending on AI platforms set to increase substantially through 2028, Palantir is well-poised for strong growth.

Palantir has also seen its government and commercial customer base increase last year due to the immense demand for its AI platform, called Artificial Intelligence Platform (AIP). This AI platform can automate tasks by integrating AI agents that humans can’t do. 

The demand for AIP increased Palantir’s revenues from both the government and commercial sectors in the last reported quarter. At the same time, Palantir’s net-dollar retention rate improved in the last reported quarter.

Above all, Palantir may have connected well with its government clients but has more potential to expand its reach among commercial clients in the United States, indicating room for further growth. As a result, the $0.38 Zacks Consensus Estimate for PLTR’s EPS is up 31% from a year ago. 

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NVIDIA & Palantir Are Must-Buy Stocks for 2025

To conclude, NVIDIA’s GPU market dominance and high demand for AI chips will help its shares keep scaling upward this year. Similarly, the growing commercial customer base and solid demand for AIP provide Palantir’s shares massive room for growth in the current year. 

Thus, astute investors should bet on both stocks to maximize their growth potential. Both NVIDIA and Palantir have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

 

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