Palantir Technologies (PLTR 2.59%) is a great company. It's become a key player in the artificial intelligence (AI) world by making AI more actionable. Its Artificial Intelligence Platform (AIP) gathers data from many sources and then links it to real-world assets and processes. This allows organizations to use AI to help solve problems in a more intelligent, efficient way.
The company's technology is being used for everything from helping the U.S. military on the battlefield to identifying sepsis in hospitals and helping companies streamline logistics. The breadth of applications for AIP is just massive massive.
So why not go out and buy the stock hand over fist? The problem is valuation.
Palantir trades at a forward price-to-sales (P/S) multiple of over 91 times 2025 analyst revenue estimates. That's not earnings -- that's sales. That's high by any standard. Yes, Palantir has been executing incredibly well, but at its current valuation, any hiccup could hit the stock hard. As such, investors may want to consider some less pricey potential AI winners.
Alphabet
While Alphabet (GOOGL 0.54%) (GOOG 0.45%) shares have started to rebound recently, the stock is still trailing the greater market so far this year. Investors keep fixating on AI as a threat to its core Google search business, but that misses the point entirely. Google isn't just a search engine -- it's a massive content discovery platform with unmatched reach, data, and one of the world's best ad networks behind it.
Billions of users access the internet thought its Chrome browser and Android operating system. Most people are used to waking up and using Google, so Alphabet doesn't need to change user behavior when it comes to AI. It just needs to enhance what it's doing with AI, and that is exactly what it's done with its new AI-powered Search Mode. According to Oppenheimer, 82% of users found Google AI mode more useful than traditional search, and most preferred it to ChatGPT.
The company also has a major leg up in monetizing AI. While others are charging high subscription fees, Google can keep many of its tools free and monetize them through its ad network. It's already doing this with features like "Shop with AI," which improves e-commerce search and user engagement.
Add in its fast-growing cloud business, YouTube, its leading custom AI Tensor Processing Unit chips, Waymo, and its Willow quantum computing chip, and you have one of the most innovative and undervalued platforms in the AI race.
Amazon
While Amazon (AMZN -0.33%) is known for e-commerce and cloud computing, what it's doing behind the scenes with AI is just as important. The company has been integrating AI across its logistics, warehouse automation, and delivery operations to improve efficiency and save costs.
Amazon already built a regionalized fulfillment network to cut shipping times and costs, but now it's using AI to predict the best warehouses to store items and to optimize delivery routes. It's even using AI to help drivers find tricky drop-off locations in places like large apartment complexes. It's also deploying increasingly sophisticated robots that can detect damaged goods, handle odd-shaped packages, and even repair themselves.
On the cloud side, Amazon continues to be the market-share leader with Amazon Web Services (AWS). Its Bedrock and SageMaker platforms make it easier for developers to build and run AI models, and its custom-built AI chips help keep costs down. That gives AWS a real cost advantage as AI workloads ramp up and it invests in data center infrastructure.
All of this is laying the foundation for stronger profitability going forward. Amazon is known to invest big to win big, and while much of its investments are behind the scenes, this is an AI and robotics leader.
Image source: Getty Images.
Meta Platforms
Meta Platforms (META -0.26%) is another company that is investing heavily in AI. CEO Mark Zuckerberg is betting big on both AI infrastructure and talent, with the goal of building what he calls "personal superintelligence."
The company plans to spend "hundreds of billions of dollars" building out next-generation AI infrastructure. This includes multiple AI superclusters that will be able to train enormous AI models. But Meta isn't stopping there. The company has been aggressively poaching top AI talent from other companies with lucrative pay packages to join its new Meta Superintelligence Labs.
Currently, Meta has been using AI to great success to increase user engagement and make its ads more successful. This has been leading to more ad inventory and higher ad prices. Meanwhile, it's just begun to serve ads on its popular messaging app, WhatsApp, and new social media platform, Threads.
However, Zuckerberg's ultimate vision is a lot bigger. He's not finished with augmented or virtual reality, and he wants Llama to become a universal AI assistant that everyone in the world will access.
The strength of Meta's core business is a good reason to own the stock, as the company will have a lot of growth from beginning to serve ads on WhatsApp and Threads. Meanwhile, Meta's big bets on AI and other technology give investors a lot of future optionality that isn't priced into the stock.
