Chipmaker Nvidia (NASDAQ: NVDA) has dominated the artificial intelligence (AI) stock space, outperforming most of the market with strong underlying fundamentals heading into the new year.
Nvidia’s success can be attributed to its chips, like the H100, which are critical for training advanced AI models. The company’s partnerships, software ecosystem, and first-mover advantage have positioned it at the center of the AI growing ecosystem.
At the same time, competition in the AI space is heating up heading into 2025, with several players putting in place initiatives likely to challenge Nvidia’s dominance. To explore this possibility, Finbold consulted OpenAI’s ChatGPT-4o tool for insights on which AI stocks might outshine Nvidia in the coming year.
Palantir (NASDAQ: PLTR)
ChatGPT highlighted Palantir (NASDAQ: PLTR) as an increasingly undervalued AI contender despite its strong government and private-sector contracts growth and consistent earnings and revenue beats.
According to the tool, Palantir is transitioning into an AI giant by leveraging its proprietary platforms, such as Foundry and Apollo, which manage and deploy software.
Recently, the company has been in the spotlight after notable wins, such as an expanded partnership with Shield AI to develop scalable, AI-driven solutions for autonomous systems in challenging environments.
Additionally, Palantir achieved a significant milestone with FedRAMP authorization, solidifying its reputation as a secure cloud services provider for government operations.
This authorization is expected to help Palantir attract more government contracts, which have been integral to its revenue. In 2023, revenue from this segment totaled $1.222 billion compared to $1.002 billion from commercial sources. The U.S. government remains its largest client, benefiting from growing federal defense budgets.
The AI tool noted that the company benefits from a ‘wall of worry,’ where investor skepticism could amplify gains as sentiment shifts. Indeed, some Wall Street analysts foresee Palantir leading the software AI space in 2025.
For instance, Dan Ives from Wedbush Securities has labeled PLTR the ‘Messi of AI,’ recently raising its price target from $57 to $75 with an ‘Outperform’ rating. Ives cited increased confidence in Palantir’s AIP strategy, with use cases likely to take off in the next 12–18 months.
At the close of the last trading session on December 6, PLTR was trading at a new all-time high of $76, with the stock ending the day up 6.2%. Year-to-date, PLTR has rallied 360%, outperforming Nvidia, which gained 195% over the same period.
Despite the impressive sentiments and fundamentals, the stock faces challenges, including overvaluation concerns that have some Wall Street analysts on edge.
Advanced Micro Devices (NASDAQ: AMD)
According to ChatGPT-4o, Advanced Micro Devices (NASDAQ: AMD) could outshine Nvidia based on the company’s new product lineup, which aims to dominate the AI scene.
The AI tool specifically cited the potential of AMD’s MI300 series, which targets data centers and AI-specific workloads.
These chips are designed to rival Nvidia’s A100 and H100 GPUs in memory bandwidth and power efficiency areas, making them suitable for managing data-heavy workloads and AI model training.
Additionally, as demand for AI chips grows, AMD unveiled new processors for next-generation commercial PCs and high-performance computing in October.
According to ChatGPT, AMD’s ability to compete with Nvidia means that as demand for diverse and cost-efficient AI solutions rises, the company is likely to attract more developers and enterprises, potentially eating into Nvidia’s market share in 2025.
In 2024, AMD has enjoyed strong financials. For instance, the company reported $6.8 billion in revenue in the third quarter, an 18% year-over-year increase driven by strong data center and client segment growth. Net income surged 158% year-over-year. Following these results, the company forecast data center revenue to exceed $5 billion in 2024.
At press time, AMD was trading at $138, dropping nearly 2% over the past 24 hours. For 2024, the stock has posted modest gains of less than 0.1%.
While Nvidia has had a stellar year, AMD and Palantir have strong fundamentals that could help them rally in 2025. The two companies offer distinct strengths—Palantir excels in software-driven AI solutions, while AMD focuses on AI hardware innovation—positioning them to challenge Nvidia from complementary angles. However, the sustainability of the AI boom will be crucial.
Featured image via Shutterstock
