Among megacap technology stocks, no other company has benefited from the artificial intelligence (AI) revolution more than Nvidia (NVDA 1.03%). Over the last three years, its shares have skyrocketed 960%, propelling the company's market capitalization to $4.4 trillion and making it the most valuable business in the world.
Perhaps the largest beneficiary of AI beyond the "Magnificent Seven" is data analytics specialist Palantir Technologies (PLTR +3.16%), whose shares gained more than 2,000% since ChatGPT was released three years ago.
It was only a matter of time before these two AI darlings synced up. Now, with Nvidia and Palantir joining forces, investors are surely wondering if the recent partnership could redefine the AI landscape.
Let's break down how Palantir and Nvidia are working together and assess how investors could benefit from this new dynamic duo.
Image source: Getty Images.
How the partnership works
It's important for investors to understand why large corporations and government agencies are investing in AI in the first place. One of the biggest pain points at the enterprise level is sifting through unstructured, messy data that's housed across an array of disparate systems that don't integrate well with one another.
NASDAQ: PLTR
Key Data Points
Palantir made its bones addressing this issue and fixing it. The company's suite of software tools -- Foundry, Gotham, and Apollo -- can be stitched together to build extremely detailed visualization workflows, called ontologies, that help derive data-driven insights in real time.
Nvidia is now bringing its CUDA software and Blackwell GPU architecture to Palantir's Artificial Intelligence Platform (AIP) -- building a comprehensive system featuring advanced analytics, agentic AI, and customizable workflows.
Why is the Palantir-Nvidia deal important?
Nvidia lists hyperscalers like Microsoft, Amazon, Alphabet, Meta Platforms, Oracle, and OpenAI as some of its largest customers, but not much is published about how the company's technology is powering next-generation services. Rather, throughout the AI revolution, Nvidia's technology stack has mostly been aimed at building generative AI applications within the training of large language models.
By partnering with Palantir, Nvidia is making a clear move beyond laboratories and research environments and becoming more deeply integrated into corporate workflows. Bringing Nvidia's hardware and software to AIP's infrastructure opens up a host of opportunities in how AI is applied across retailing, drug discovery, energy management, manufacturing, defense missions, logistics optimization, financial risk modeling, and specialized government operations.
Is the Palantir-Nvidia partnership a game changer?
For Palantir, partnering with Nvidia is meaningful because it could help supercharge the company's customer acquisition efforts in an otherwise fiercely competitive enterprise software industry riddled with incumbent providers such as Salesforce and SAP.
Moreover, broadening AIP's capabilities with new features from Nvidia could lead to sustained pricing power and improved customer lifetime value -- leading to stronger unit economics for Palantir in the long run.
For Nvidia, the deal is equally important. Working with Palantir could help change investors' perception of the company from being primarily a chip designer to a full-spectrum AI stack across hardware and software that's leveraged across every major industry.
Taken together, Palantir and Nvidia are building the AI operating system for enterprises and government agencies. As companies invest more heavily into AI-driven products for their daily operations, the two partners are increasingly becoming the default foundation on which these ecosystems are built.
In the long run, I think both Palantir and Nvidia will benefit from accelerating revenue and widening profit margins as a result of this new best-in-class offering. For these reasons, I think their partnership could become transformative for each company as AI continues to evolve.
