Better Artificial Intelligence (AI) Stock: Palantir vs. Snowflake

Despite general tech sector headwinds, Palantir and Snowflake stocks have significantly outperformed, driven by their successful forays into AI. Palantir, with its AIP platform, has seen revenue growth accelerate to 39% year-over-year, while Snowflake's AI integrations have boosted customer engagement and revenue. While both companies exhibit strong growth potential in the expanding AI market, Palantir is growing faster but Snowflake is cheaper, making the choice dependent on an investor's risk tolerance.

Analysis

Despite a challenging environment for technology stocks in 2025, evidenced by the Nasdaq Composite's flat performance and earlier 24% downturn due to tariff-related turmoil, Palantir Technologies (PLTR) and Snowflake (SNOW) have demonstrated significant resilience, driven by their advancements in artificial intelligence. Palantir's stock has surged 63% year-to-date in 2025, propelled by its Artificial Intelligence Platform (AIP), launched approximately two years prior. This platform has accelerated Palantir's revenue growth from 18% year-over-year in Q1 2023 to a notable 39% in Q1 2025. Further indicating future growth, Palantir's remaining deal value (RDV) increased 45% year-over-year to $6 billion, surpassing its revenue growth and leading to an upward revision of its annual guidance. The company also saw an 8 percentage point year-over-year increase in adjusted operating margin and a 62% spike in earnings, supported by an AI software platform market projected by IDC to reach $153 billion by 2028. Similarly, Snowflake, whose stock has risen 32% in 2025, is capitalizing on AI by enabling customers to build and deploy AI models using their data stored on its platform. Snowflake's Q1 product revenue grew 26% year-over-year, and its remaining performance obligations expanded by 34% to $6.7 billion, with 45% of its customers already utilizing its AI tools and customer count up 19%. Snowflake targets a $342 billion addressable market for its data cloud platform by 2028 and reported a 71% bottom-line growth. While both companies exhibit robust AI-driven growth, Palantir showcases faster revenue acceleration, whereas Snowflake demonstrates stronger bottom-line growth and offers a comparatively cheaper valuation, albeit both stocks are considered expensive. The primary distinction for investors lies in this valuation difference and their respective risk appetites.

Key Decisions for Investors

• Investors should acknowledge the strong AI-driven growth trajectories of both Palantir and Snowflake, which have outperformed the broader tech market despite macroeconomic pressures.
• Consider Palantir for portfolios with a higher risk tolerance, focusing on its rapid 39% Q1 2025 revenue growth, 62% earnings increase, and expanding $6 billion remaining deal value, but be mindful of its premium valuation.
• Evaluate Snowflake for its robust growth in the AI and data cloud sectors, highlighted by 26% Q1 product revenue growth, 71% bottom-line growth, and a $6.7 billion RPO, at a relatively more attractive valuation compared to Palantir.
• Given that both companies trade at high multiples, closely monitor execution on their AI strategies, contract wins, and margin improvements, as well as the potential for market volatility.
• Note the article's mention that Palantir was not among The Motley Fool Stock Advisor's recent top 10 stock picks, suggesting that diversified research and consideration of other AI opportunities may be prudent.