Palantir Technologies (PLTR +1.25%) has been one of the hottest stocks in the market for the past two years and for good reason. The company has seen its revenue growth accelerate every quarter for the past two years as the U.S. government embraces artificial intelligence (AI) to modernize its military and intelligence operations, and U.S. commercial customers flock to its AI Platform (AIP). Last quarter, its revenue climbed by 63%, with U.S. commercial revenue growth soaring 121% and U.S. government revenue up 52%.
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The company's success in the commercial space is driven by AIP, which has become an AI operating system that can help customers leverage large language models (LLMs) to better solve real-world problems. It does this by gathering all an organization's data from disparate sources and then organizing it into an ontology that then links the data to physical assets and real-life processes. This helps reduce AI hallucinations (giving inaccurate information), letting AIP be used to help solve a wide breadth of problems across various industries.
NASDAQ: PLTR
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However, Palantir's huge gains have left the stock at a huge valuation; it's trading at a forward price-to-sales (P/S) multiple of nearly 48 times 2026 analyst estimates. Let's look at two AI stocks at much cheaper valuations that could be better buys.
Salesforce
Much of Palantir's success with AI comes from its ability to create clean, organized data that helps AI avoid mistakes and be more reliable. Salesforce (CRM +2.65%) is looking to apply that same principle with AI agents. The company's core competency was helping organizations break down data silos to give departments a unified view of company data. More recently, it launched Data 360 (originally called Data Cloud), which organizes and unifies data from not just across Salesforce but from other sources, such as cloud computing systems and Snowflake. It then acquired Informatica, which specializes in master data management and can extract data from legacy, on-premise databases.
NYSE: CRM
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All of this helps position Salesforce to become an organization's single source of truth for its data and the engine for its AI agent platform Agentforce. Minimizing AI hallucinations for organizations is important, but it becomes even more important when dealing with AI agents that can actually perform tasks, like issuing a refund or ordering equipment. Salesforce has been enjoying early success with Agentforce, with its annual recurring revenue (ARR) surging 330% to $540 million last quarter. However, the company is still in the very early innings of implementing its agentic AI strategy, and it is positioning itself to be a leader in the space.
Meanwhile, the stock is inexpensive, trading at a forward price-to-earnings (P/E) ratio of under 20 times next year's analyst estimates and a price/earnings-to-growth (PEG) ratio near 0.6 times, with PEGs below 1.0 considered undervalued.
UiPath
Similar to how Palantir created an AI orchestration layer with AIP, UiPath (PATH 7.88%) is looking to be an AI agent orchestration platform with its Maestro solution. With numerous vendors creating their own AI agent platforms, organizations are going to need a way to manage all these third-party AI agents. This is where Maestro comes in. It not only has no code and low-code tools for customers to create their own AI agents, but it is also able to manage all the third-party AI agents an organization is dealing with.
NYSE: PATH
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The company's strength in this area stems from its foundation in robotic process automation (RPA), which is the use of software bots to perform simple, rules-based repetitive tasks, like data entry. Due to this, UiPath's platform has governance and compliance safeguards already in place and can connect with legacy, on-premise systems. Its platform also has the added benefit of being able to handle both AI agents and software bots and can assign the appropriate tasks to each, as software bots can perform tasks more cheaply.
UiPath is just starting to see its revenue growth accelerate, with revenue climbing 16% last quarter. Meanwhile, the company has a huge opportunity in front of it, and the stock is cheap, trading at a forward P/S multiple of just 5 times, a forward P/E of under 21.5 times, and a PEG below 0.65 times.
