Title: Skip Palantir and Opt for These Two Tech Stocks instead?
Palantir Technologies (PLTR) has been one of the standout performers in the market this year, with a staggering year-to-date growth of over 340%. However, this impressive performance has also resulted in a hefty valuation, with the stock trading at an astronomical forward price-to-sales ratio (P/S) of approximately 49.5 times next year's analyst estimates.
After accounting for its net cash position, the stock's enterprise-value-to-sales multiple (EV/S) drops slightly to around 49.2. For context, at the peak of software-as-a-service (SaaS) valuations, SaaS stocks typically traded at an EV/S multiple of 20 times, even with growth rates exceeding 30%.
Despite its high valuation, Palantir has established itself through its work with the U.S. government, where its platform has been instrumental in mission-critical tasks like counterterrorism and tracking COVID-19 cases. However, the company's valuation has become quite extreme, with even its top executives selling off their shares significantly in recent months.
Two other fast-growing companies with more modest valuations that could serve as alternatives are Nvidia (NVDA) and GitLab (GTLB).
Like Palantir, Nvidia has had a stellar year, with a year-to-date growth of about 190%. The tech giant's stock trades at a forward price-to-earnings ratio (P/E) of approximately 32.6 based on 2025 analyst estimates. This is significantly lower than Palantir's forward P/S ratio, making a direct comparison between the two's valuations more favorable to Nvidia.
Nvidia is poised to continue benefiting from the ongoing artificial intelligence (AI) infrastructure build-out. Large tech companies are investing heavily in data centers to run AI applications and train large language models (LLMs). Nvidia's graphics processing units (GPUs) have become the backbone of these AI models' computing power. As AI models become more sophisticated, they require exponentially more computing power for training. Companies actively working on creating the best AI models will drive more demand for Nvidia's GPUs.
GitLab, a DevSecOps platform company, grew its revenue slightly faster than Palantir in its last quarter, reporting a 31% increase. Its outstanding 89% gross margins and strong revenue growth (30-40% in the past six quarters) make for an attractive alternative to Palantir. GitLab Duo, its suite of AI-powered tools for developers, has been a significant driver of growth. The company also recently announced a deal with Amazon Q to accelerate software development and deployment for AWS customers.
With a forward P/S of 11.5, GitLab's valuation is a significant discount compared to Palantir's, despite both companies growing revenue at the same pace. This makes GitLab an enticing cheaper alternative to consider.
If you're considering alternative investments with more modest valuations, you might want to look at Nvidia. The tech giant, with a forward P/E of approximately 32.6 based on 2025 analyst estimates, has had a year-to-date growth of about 190%, making it a more financially viable option compared to Palantir's high valuation.
GitLab, a DevSecOps platform company, offers an attractive alternative with a significantly lower forward P/S ratio of 11.5. Despite both companies growing revenue at the same pace, GitLab's valuation is more affordable, making it an enticing option for investors looking to invest in the finance sector.
