Palantir Technologies (PLTR -2.02%) and Snowflake (SNOW -0.63%) are both companies that focus on cloud and AI markets. Palantir’s platform helps government agencies and large companies analyze data from various sources using AI algorithms to make better decisions. On the other hand, Snowflake assists organizations in aggregating and storing data in a centralized cloud-based data warehouse for easy access by third-party apps.
While these companies initially impressed investors, their sales growth slowed down over the past two years, leading to decreased valuations. As of now, Palantir and Snowflake trade below their all-time highs from 2021 by 43% and 66%, respectively.
Palantir’s revenue growth has slowed down recently, but it expects a rise of 18% to 20% in 2024. Analysts project a compound annual growth rate (CAGR) of 20% from 2023 to 2026 for Palantir. On the other hand, Snowflake set a goal to reach $10 billion in annual product revenue by fiscal 2029, but it faces challenges as its growth rates have declined.
Despite facing similar macro challenges, Palantir is more profitable than Snowflake. Palantir turned profitable in 2023, while Snowflake is yet to break even on a GAAP basis. Snowflake also faces tough competition from major cloud providers like AWS, Azure, and Google Cloud.
If forced to choose between Palantir and Snowflake, Palantir seems to be the better buy due to its stabilizing growth rates, soaring profits, and fewer direct competitors in its niche market. However, caution is advised as both stocks seem to have inflated valuations from the recent AI stock buying frenzy.