Palantir Technologies (PLTR +0.52%) stock has rallied remarkably to become one of the most important companies in the world. It is now the 22nd largest company globally, with a market cap of just under $426 billion as of this writing.
Palantir is a great stock, but it may have gotten ahead of itself. That's not surprising considering that its shares have jumped by more than 945% since the beginning of 2024. Palantir is on track to capitalize on the fast-growing market for generative AI software by quickly building a solid and sticky customer base that's spending more on its offerings, but its growth isn't solid enough just yet to justify the stunning rally.
Palantir's revenue in the second quarter of 2025 increased by 48% year over year. However, its price-to-sales ratio of 132 is too high, especially considering that companies growing at a faster pace than Palantir are trading at cheaper multiples. That's why it won't be surprising to see Palantir stock struggle to deliver more upside in the next five years, as it will have to significantly boost its growth rate to justify the expensive valuation.
As a result, don't be surprised to see companies that are not just cheap but are also growing at an impressive rate to overtake Palantir's market cap in the next five years. Let's take a closer look at one such name now.
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Secular growth in AI chips and gaming consoles should give this company a big boost
Advanced Micro Devices (AMD +11.44%) has a market cap of $260 billion, which is around 64% lower than Palantir's. However, its price-to-sales ratio is much lower at just 9. What's more, the company's growth rate is getting better thanks to the deployment of its central processing units (CPUs) and graphics processing units (GPUs) in servers and personal computers (PCs).
NASDAQ: AMD
Key Data Points
AMD reported a 32% spike in revenue in the second quarter of 2025 to $7.7 billion. Its client and gaming segment produced almost 47% of the top line last quarter, growing by 69% from the year-ago period.
This segment has two major catalysts for the next five years. The first is the AI-capable PC market that's expected to grow by 4.5x in size by 2030. AMD is the second-largest player in the PC CPU market, with a unit market share of almost 24% at the end of Q2. That figure jumped by 2.8 percentage points from the year-ago period. AMD has the potential to win more share of this market in the future by producing more advanced chips, which could help it eat into Intel's dominance in client CPUs.
The next catalyst for AMD's client and gaming segment will be the next generation of gaming consoles that are expected to be launched in 2028. Historically, AMD has been the go-to designer of custom chips that power consoles from Microsoft and Sony. The chipmaker is reportedly going to design the chips for the next-gen consoles as well.
The company reportedly pulled in $5 billion in revenue in 2021 from sales of semi-custom chips powering the current Xbox and the PlayStation generation, just a year after they hit the market. So, a new generation of consoles within the next five years is going to be an additional catalyst for AMD's client and gaming segment.
Meanwhile, the data center business is now producing 41% of AMD's top line. This segment's revenue was up by 14% year over year in Q2. The good part is that AMD is on track to gain from the adoption of both server CPUs and GPUs in AI data centers. That's because its Epyc server CPUs are designed for running AI inference applications, which explains why they are gaining traction globally.
On the other hand, AMD is set to launch more powerful data center GPUs so that it can give Nvidia a run for its money in this market. All these efforts could pay off nicely over the next five years and could even help AMD increase its data center revenue by an impressive 10x by 2030.
AMD's market cap is likely to jump significantly in the next five years
AMD's revenue is projected to increase at solid double-digit rates over the next couple of years.
Data by YCharts.
However, the expected arrival of gaming consoles in 2028 and AMD's ability to capture a bigger share of the PC and server chip markets could allow it to step on the gas and do better than Wall Street's expectations. But even if we assume that AMD manages to grow its revenue at 15% a year in the three years following 2027, its top line could hit almost $72 billion at the end of 2030.
Multiplying that by the U.S. technology sector's average sales multiple of 9.2 (which is almost in line with AMD's current sales multiple) indicates that this AI stock's market cap could hit $662 billion in five years. That's likely to be higher than Palantir's market cap after 10 years, which is why investors looking for an attractively valued stock capable of winning big from the AI revolution should consider buying AMD.
