Technology stocks have been under pressure this year due to the tariff-fueled turmoil, as evident from the flat performance of the Nasdaq Composite so far in 2025 (it was down as much as 24% at one point). But shares of Palantir Technologies(NASDAQ: PLTR) and Snowflake(NYSE: SNOW) have defied the sell-off and have clocked impressive gains.
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Palantir stock has shot up 63% this year despite bouts of volatility. Snowflake stock has jumped close to 32%, aided by a solid set of results recently. Their efforts related to artificial intelligence (AI) are a common factor driving the gains of both companies.
While both stocks are doing well, if you are looking to add just one of these two AI stocks to your portfolio right now, which one should it be? Let's find out.
Image source: Getty Images.
The case for Palantir
Palantir Technologies helps commercial and government clients integrate generative AI capabilities into their operations with its Artificial Intelligence Platform (AIP), which was launched roughly two years ago. This platform has turned out to be a hit among customers because of the productivity and efficiency gains it delivers, reducing operational costs.
According to various third-party assessments, Palantir is considered to be the leading provider of AI software platforms, which are a collection of infrastructure and tools that are needed to develop, train, deploy, and manage AI applications. The market seems to agree: The release of AIP has led to a sharp acceleration in the company's growth.
Revenue in the first quarter of 2023 (just before it launched its AIP), increased by 18% from the year-ago quarter. That jumped significantly to 39% year over year in the first quarter of 2025, a clear indication that the company is capitalizing on the fast-growing market for AI software platforms.
Its rapidly improving revenue pipeline indicates that its growth is likely to pick up its pace. The software specialist's remaining deal value (RDV), which refers to the total value of contracts that it is yet to fulfill, increased 45% from the year-ago period to $6 billion. With RDV growth outpacing the increase in its top line, it suggests that the company is landing more contracts than it is fulfilling.
With this signal for even stronger growth in the future, the company bumped up its annual guidance as well.
Moreover, Palantir's earnings are increasing faster than its revenue due to the company's favorable unit economics. Customers have shown a tendency to expand their adoption of the business's services.
This explains the year-over-year increase of 8 percentage points in its adjusted operating margin in the previous quarter, which eventually led to a 62% spike in its earnings. With the market for AI software platforms forecast to generate annual revenue of $153 billion in 2028, according to data analytics specialist IDC, there is a solid chance Palantir will keep growing at elevated levels thanks to AI.
The case for Snowflake
Snowflake originally designed its data cloud platform to help customers securely store, consolidate, and access their data in a single source. The company wisely transitioned to allow them to build and deploy AI models and applications using their stored data.
Snowflake has been investing in graphics processing units (GPUs) from chipmakers to run popular AI models, with which its customers can build AI agents, AI assistants, document processing apps, and other types of applications.
This business model lets customers use its AI infrastructure and software stack on a pay-as-you-go basis, eliminating the costs of buying expensive GPUs and managing that infrastructure.
Snowflake's AI offerings allow clients to unlock more value from the data they have stored on its platform. Almost 45% of its customers are already using its AI tools. Customer count increased by 19% year over year in the first quarter. And the pool of customers that could deploy its AI solutions is likely to keep growing in the long run, suggesting that there is a solid possibility of an acceleration in the company's growth.
Product revenue in the first quarter increased 26% from the year-ago period, while its remaining performance obligations grew much faster at 34% to $6.7 billion, thanks to an increase in spending by existing customers as well as the addition of new customers. The $342 billion addressable market that Snowflake sees for its data cloud platform by 2028 indicates that it has tremendous room for growth, and AI could help it corner a chunk of that market.
So, like Palantir, Snowflake is poised to benefit from the secular growth in cloud-based AI services. But will it be able to deliver more upside than its rival?
The verdict
We see that both Palantir and Snowflake are registering healthy growth rates, and they could do better in the future as their revenue pipelines improve because of AI. However, Palantir's revenue is growing at a faster pace than Snowflake's, while the latter's bottom-line growth of 71% was better than Palantir's.
The big factor that separates both companies is their valuation. Snowflake's stock is significantly cheaper than Palantir's.
Both companies have expensive valuations, but their growth and prospects justify that. So the choice between the two comes down to investors' risk tolerance.
Those who can accept more risk and are willing to endure volatility can consider Palantir, while Snowflake's relatively cheaper valuation means it could be ideal for investors who are looking for a fast-growing company but aren't willing to pay Palantir's multiples.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies and Snowflake. The Motley Fool has a disclosure policy.
