Prediction: 2 Artificial Intelligence (AI) Stocks That Will Be Worth More Than Palantir

• Alibaba is already worth nearly as much as Palantir, but it may soon blow past it given its tremendous opportunities in tech.

• AMD has played second fiddle to Nvidia for a while, but investors have begun to take it more seriously of late.

• 10 stocks we like better than Advanced Micro Devices ›

Palantir Technologies (NASDAQ: PLTR) has undoubtedly been one of the big winners in artificial intelligence (AI). Its valuation has skyrocketed by more than 2,790% since the start of 2023. Its market cap of $441 billion makes it one of the most valuable companies in the world.

The problem, however, is that Palantir’s business fundamentals don’t support this outlandish stock valuation — the stock trades at a price-to-earnings (P/E) multiple of more than 615. A correction could be coming soon.

I predict that by the end of next year, the following two AI stocks will become more valuable than Palantir.

Alibaba Group (NYSE: BABA) is a top Chinese-based e-commerce company that’s involved in tech and AI development. And lately, it’s been picking up steam. At around $409 billion in market cap, it’s not far behind Palantir. But given that their trajectories may be going in opposite directions in the year ahead, I think it can potentially blow past the data analytics stock in the not-too-distant future.

In addition to the stock looking reasonably cheap, trading at a P/E multiple of just under 21, Alibaba has also been experiencing explosive growth due to AI. While its top line rose by only 2% in the most recent quarter (it ended on June 30), the company noted that AI-related product sales were up in the triple digits for eight straight quarters.

Alibaba may still be in its early growth days with respect to AI, which makes it an exciting growth stock to buy right now. It has partnered with tech giant Apple to develop AI features for the company’s iPhones. It’s also working on developing its own AI chip and has its own AI chatbot (Qwen).

With so much growth on the horizon, it’s little wonder why the stock has more than doubled in value this year. And if it can continue growing its AI business, this rally is likely to continue well into next year.

One stock that’s a bit further away in valuation is chipmaker Advanced Micro Devices (NASDAQ: AMD), whose market cap is around $370 billion. Its stock price is up over 88% this year as excitement has been building due to its close relationship with ChatGPT-maker OpenAI. The company recently announced it would be deploying 6 gigawatts’ worth of AMD’s GPUs over the next few years, and that through warrants, it may end up taking a 10% stake in the chipmaker as well.