Many technology stocks enjoyed impressive gains in the last year or so. Two such stocks are Palantir Technologies (PLTR 1.87%) and Reddit (RDDT +0.98%).
Palantir shares surged more than 250% over the past 12 months through March 20. Reddit stock skyrocketed from a 52-week low of $37.35 last April to a jaw-dropping high of $230.41 in February.
And now may be the time to pick up shares in one of these businesses. Uncertainty around the U.S. economy and Donald Trump's tariffs has caused volatility in the stock market over recent weeks, pushing down the price of many stocks, including Palantir and Reddit.
Both are down substantially from their 52-week highs reached in February.
Which is the better buy now?
Palantir's AI strength
Palantir is well positioned to capitalize on the rapidly expanding artificial intelligence industry. The company spent years building digital tools that allows its software to understand relationships between all kinds of data. The ontology is the heart of its AI Platform (AIP), and why AIP enables organizations to implement AI in as little as a few days.
AIP's a hit with customers, causing Palantir's sales to soar. It ended 2024 with $2.9 billion in revenue, a 29% increase from 2023's $2.2 billion.
Not only is Palantir's revenue rising, but it also runs a profitable business. It reported a strong gross margin of 80% in 2024. This led to net income of $468 million last year, an increase from 2023's $217 million.
Next, Palantir is expanding its business into the multitrillion-dollar manufacturing industry with a new product, Warp Speed. Launched in 2024, Warp Speed aims to boost manufacturing with AIP-fueled software to manage elements such as supply chains and resource planning.
Reddit's social media success
NYSE: RDDT
Key Data Points
Reddit shares exploded over the past year (up 165%) as the company delivered outstanding business performance. For starters, the social media giant exhibited strong user growth in 2024, nearly 20 years in to its existence.
Reddit exited 2024 with "daily active unique uniques" (DAUq) of 101.7 million, a 39% year-over-year increase. A DAUq is a person visiting Reddit's website or mobile app at least once in a 24-hour period.
As a social media company, Reddit relies on users to keep its virtual communities thriving. It's essentially a giant online forum where people can participate in discussions about a vast range of topics and interests.
The DAUq numbers is also important because the company depends on advertising for revenue, and the more users who see ads on Reddit, the more money the company can generate. That showed in the company's 2024 performance.
Reddit crossed the $1 billion revenue mark as it exited 2024 with $1.3 billion in sales. This result represented amazing 62% growth over 2023's $804 million.
Not only is Reddit attracting users, and thereby growing revenue, but the company also runs a highly profitable business. Its gross margin hit an eye-popping 90.5% in 2024, which was a significant increase from the prior year's 86.2%.
Consequently, Reddit ended the fourth quarter with net income of $71 million, up from $18.5 million in 2023. For the full year, however, Reddit had a net loss of $484.3 million due to costs associated with last year's IPO.
But with 2024 behind it, and a high gross margin, Reddit is well positioned to extend its Q4 profitability into subsequent quarters.
Choosing between Palantir and Reddit
The strong performance Palantir and Reddit delivered in 2024 explains why both saw share prices soar. In 2025, they anticipate sales to continue growing.
Palantir forecasts Q1 revenue to reach at least $858 million, a 35% jump from the prior year's $634 million. Meanwhile, Reddit expects Q1 sales to range between $360 million and $370 million. That would represent a minimum 48% increase from 2024's Q1 sales of $243 million.
Given their strong business performance, choosing between these tech stocks -- if you want to only buy one -- is a challenge. As a tie-breaker, here's a look at both companies' valuations using their forward price-to-earnings (P/E) ratios. This metric tells you how much investors are willing to pay for a dollar's worth of earnings based on earnings estimates for the next 12 months.
Data by YCharts.
With recent stock market volatility causing Palantir and Reddit shares to take a hit, both saw forward P/E multiples decline from February to March. Even so, Reddit's 36 times forward P/E is substantially lower than Palantir's 156. This indicates Reddit stock is the better value.
You could own shares in both given they are both well-run businesses delivering outstanding results. But if you have to choose one, Reddit's superior valuation gives it the edge over Palantir as the tech stock to buy now.
