For technology investors, the current era is exciting. The latest breakthroughs in artificial intelligence (AI) and quantum computing may be an imminent golden age of innovation at a glance. ionq (NYSE: IONQ) and Palantir Technology (NASDAQ: PLTR) Have a great storyline – all struggling to establish themselves as leaders in these new markets.
These stocks have produced exciting returns. IONQ has grown 650% since 2023, while Palantir has soared more than 1,300%.
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The past few years may just be the beginning. Experts believe that artificial intelligence may become a multi-billion dollar industry in the next decade and beyond. Which AI inventory can be selected for a long time? None of this is perfect, but the facts ultimately reveal a clear choice.
In a sense, artificial intelligence is a software that can do more than people dream of. AI models can now think, analyze data, and even generate written content and images. Who knows what to do in a few years from now? Ionq and Palantir drive innovation in different ways the bleeding edge.
Palantir builds customer AI software applications for government and commercial applications. It requires data and analyzes it to generate actionable insights in real time. As a result, Palantir's AI software is well suited for countless use cases. It can assist military missions, coordinate personnel and timetables, optimize supply chains, and detect fraudulent activities. The company's profitability height, its growth has accelerated since the summer of 2023, and Palantir can still be in an early chapter of a long-term growth story.
IONQ is competing to become a major player in quantum computing, which is crucial to unlocking the full potential of AI. Quantum computers use quantum mechanics to produce capabilities far beyond today's best supercomputers. IONQ is developing quantum computers for data centers. It's still early. Today's quantum computers are unstable and prone to errors. IONQ is competing to hone its technology and become one of the first companies to bring commercial practical quantum computers to the market.
It's interesting to compare these two AI stocks because while the performance of the past two years has been convincing, both have big flaws.
For IONQ, investors incorporate a large number of beliefs into the unknown. To be honest, quantum computing is not ready for the real world. CEO likes NvidiaJansen Huanghe letterSundar Pichai speculates that practical quantum computing may take several years. (Huang later backed off his statement.) This helps explain why IONQ generated only $43 million in revenue last year.
Quantum computing can ultimately be a huge opportunity. Nevertheless, it is unclear when the market will take off and how much or profitable IONQ will capture. IONQ has a market capitalization of $6 billion, which is a guess about your investment gains.
Palantir has no such problem. The business generated $2.87 billion in revenue last year and growth is accelerating. Palantir also emits free cash flow and net income. The problem with Palantir is the price the investors have to pay to own the stock. Remember, if valuations are notorious, even the best companies in the world can be a bad investment.
The stock’s past returns are impressive, but the epic run pushes Palantir’s valuation to track. The stock's current price-sell ratio (80) and forward value ratio (167) are enormous and require years of high octane growth or sharp decline in stock prices to equit.
At this point, Palantir is an excellent business. Maybe IONQ will challenge it in the future, but it seems like there will be a few years.
Palantir Stock's valuation is currently a bit radioactive, but the powerful companies behind it provide some cooperation for investors. Therefore, it is also the better stock of AI.
This does not mean that investors should buy stocks today. The market has become shaky in recent weeks. If investors do avoid riskier growth and technology inventory, Palantir may work harder to sell because of this valuation. Stocks have fallen nearly 25% from their highs.
Palantir could drop another 50% from here, which is still one of the most expensive stocks on Wall Street. So, there is nothing urgent. Make plans to buy slowly as stocks fall (or business grows) and get closer to a more reasonable valuation.
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Alphabet executive Suzanne Frey is a member of the board of directors of Motley Fool. Justin Pope has no position in any of the stocks mentioned. Motley fool has a place and recommends letters, Nvidia and Palantir Technologies. Motley Fool has a disclosure policy.
Better AI Stocks: IONQ with Palantir Technologies Originally published by Motley Fool
