Key Points
Palantir wants to help the U.S. government protect its most sensitive AI systems.
Following a steep fall, the software specialist's stock valuation is now more reasonable.
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Shares of Palantir Technologies (NASDAQ: PLTR) gained on Monday after the data analytics leader announced a strategic collaboration with semiconductor colossus Nvidia (NASDAQ: NVDA).
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Mission-critical AI
Palantir will help U.S. government agencies run Nvidia's Nemotron models in secure environments. The two tech giants will provide an "intelligent engine" to train, deploy, and improve these powerful artificial intelligence (AI) models while ensuring customers retain control of their data and intellectual property.
"Open-source AI is foundational to national security, public safety, and U.S. technology leadership," Nvidia CEO Jensen Huang said. "Palantir's Nemotron-powered intelligent engine shows how open models can strengthen America's leadership in AI -- giving U.S. government agencies a secure, customizable, and fully controlled foundation to build mission-critical AI systems."
Palantir's shares are becoming more attractive for investors
Most of the recent criticism for Palantir's stock has centered not on the performance of its business but on the valuation of its shares. Yet with its stock price down 44% from its 52-week high in November, that skepticism is beginning to wane.
At roughly 100 times its trailing 12-month free cash of $2.7 billion, Palantir's shares still aren't cheap. But for a top-tier artificial intelligence provider that's projected to grow earnings by 96% in 2026, that multiple isn't as irrational as it may at first appear.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
