Snowflake (NYSE:SNOW | SNOW Price Prediction) and Palantir (NASDAQ:PLTR) are well-positioned to make the most of the AI boom as they help enable other firms to harness the full power of the revolutionary technology. Indeed, the two AI software firms have been reporting some truly standout quarterly numbers of late.
And with Snowflake recently teaming up with Palantir in a deal that would allow for integration between Snowflake’s AI data cloud and Palantir’s products, most notably its AI Platform (AIP), which has enjoyed significant growth in recent quarters, I think AI investors might wish to keep the two fast-rising AI names on their radars as more deals come to be in the recent collaboration surge.
Snowflake and Palantir are teaming up. Such collaboration is good as the AI boom advances
Shares of Snowflake initially rose on the news, but the gains have since been mostly wiped out. Perhaps the excessive negativity surrounding dealmaking between AI firms and rivals has had some investors feeling mixed about such deals.
Indeed, circular financing or vendor-driven deals might have caused AI bubble fears to bubble up, but if you’re a believer in the technological revolution at hand and what it could bring to the table in terms of productivity gains, perhaps it’s time to start viewing such collaborative deals as moves that could allow the AI advancement to accelerate in a more efficient manner.
At the end of the day, AI is bound to move ahead faster if the best of corporate America works on the effort together rather than isolating themselves and running the risk of reinventing the wheel. Either way, I view the surge of partnerships and investments within the realm of AI as a good thing, not only for investors but also for the continued rise of the AI boom.
Moving ahead, I expect the collabs and investment activity in the names fuelling the AI boom to continue on. If anything, we could witness some of the less-appreciated and under-the-radar AI plays getting in on the action. Either way, I think the Snowflake-Palantir partnership is a match made in heaven and one that should have probably garnered more excitement on the part of investors.
Snowflake stock is looking intriguing at less than $250 per share
Partnering with one of the biggest forces in AI software probably should have sustained a bigger move in the shares, even though they have been hot of late, gaining more than 101% in the past year. Could it be that investors are underestimating the potential behind such a transformative deal?
Possibly. Either way, there’s no denying that the deal could act as a major catalyst to drive more rapid adoption of next-generation AI tech. Indeed, both firms view the collab as allowing for greater efficiency, speed, and perhaps most importantly, trust. Personally, I’m a massive fan of the deal and think it’s a major plus, especially for Snowflake.
Of course, it’s hard to know what to make of the deal, but it’s clear that the post-deal reaction entails a bit more skepticism than sheer excitement. Perhaps that’s because the shares of both companies are coming in hot.
Either way, the latest retreat in Snowflake back to the $240 level seems like more of a buying opportunity than anything else, as more folks grow skeptical as to the value such deals can provide. It’s hard to tell how much of a needle-mover future deals and partnerships can provide to shares of firms involved. Either way, I think a deepening of such relationships and their impact on the coming quarters will become harder to ignore.
Palantir is an AI force, but shares are too pricey for my liking
Despite consolidating in recent months, shares of PLTR are still up close to 315% in the past year. Indeed, it could take some time for investors to digest the explosive gains. Despite the hefty valuation (over 590 times trailing price-to-earnings), which has me sidelined, some folks, including those at Piper Sandler, remain bullish on the $422 billion AI software titan.
With a recent price target hike from $182 to $210 per share, Piper sees accelerating growth in the commercial segment as well as robust defense spending as continued boons for the stock. Indeed, I’m inclined to agree with Piper in that we’ve yet to see “peak commercial growth.”
Arguably, Palantir’s commercial boom is just getting started. But I wouldn’t go chasing an 18% gain from current levels, given the potential for downside, given how high expectations have risen. Arguably, such explosive growth is already baked in. And if that’s the case, it could prove tough to move the needle on shares, even with a strong quarterly result.
At this juncture, SNOW stock stands out as a better deal while it’s still down 38% from its all-time high. It’s a misunderstood name that might be nearing an inflection point of growth as it looks to make it easier for enterprises to adopt its AI data cloud offering. As AIP gains traction, perhaps Snowflake stands to also see its commercial momentum go into overdrive.
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