Artificial intelligence (AI) has the potential to change almost every industry under the sun, and companies emit strongly to be ahead of the curb. AI-powered software can automate simple tasks and at the same time make knowledge of knowledge more efficient and more productive in their work. It can also help the decision -makers to combine relevant data points in order to make faster decisions at a faster pace.
According to ABI Research, the market for Enterprise AI Software will probably grow from 98 billion US dollars to $ 391 billion in 2024 by 2030. Generative AI solutions will grow even faster like AI agents. Two companies are at the top of the AI-powered enterprise software: Palantir technologies(Nasdaq: Ulgtr) And Microsoft(Nasdaq: Msft).
Both stocks have increased in the middle of the current bull market, but the The latest withdrawal can be a purchase option For one of them. Here is the better shares for artificial intelligence.
Image source: Getty Images.
Palantir produces software that aggregates data from the processes of a company and releases implementable knowledge for its users. The introduction of its artificial intelligence platform (AIP) made it easier for everyone to work thanks to the power of natural language with their data analysis software Great -speaking models. This has led to an acceleration of the results of Palantir in the past two years.
In 2024, Palantir recorded 29% of sales compared to the previous year, while its adjusted operating margin increased 28% in the previous year to 39%. In the fourth quarter, it achieved even better results for sales growth (36%) and profitability (45% margin). The prospects of the management for 2025 indicate that sales growth of 31% and the adjusted operating margin is increased to 42%.
Palantir benefits significantly from the scale as a software company with minimal border costs. CEO Alex Karp follows a product-first approach to build the business and focuses on making an excellent product for some selected customers with deep pockets. If the product improves and adds more functions, it becomes more attractive for a wider group of companies. AIP was the key to expanding its usefulness for more companies.
Palantir has two important segments: government and commercial. It started to work exclusively on challenges for the US military, and its state platform is still making most of his income. Government contracts are generally very sticky, which guarantees a solid revenue base for Palantir.
Nevertheless, Palantir could be confronted against the growing geopolitical tension against the headwind, and since the US government wants to reduce expenses. Like the rest of the federal government, the Pentagon is currently with strong budget cuts, which could have a negative impact on the largest source of income in Palantir. On the other hand, some believe that the budget cuts could benefit Palantir because employees become more efficient and effective, which increases the need for its software if the military reduces employees.
In the midst of political tensions, Palantir wants to highlight his success outside of government contracts. His AIPCON contained a number of new commercial customers from all over the world. With the increasing growth of commercial customers, Palantir should be able to continue to achieve strong sales growth and to expand its operating range.
However, the big problem with the Palantir stock is its evaluation. Even after the recent sale, shares for 70 times the income of 2024 at the time of this Scripture act. If you use the 2025 out look of management, the price is 55 times the forecast sales for the current year. Only a handful of shares were traded with such a massive multiple. And the story has not prompted itself to buy it at prices that were comparable to Palantir.
Microsoft catapulted itself in the foreground of the AI discussion in the AI discussion when she recorded 10 billion US dollars in Openaai in early 2023. Since then it has become two fronts of the growing market for artificial intelligence: cloud computing and enterprise software.
The Cloud Computing platform from Microsoft, Azure, has had considerable growth in the past two years, since companies want to access computing and basic models in the cloud in order to develop new AI solutions for their companies or new AI-powered products for their customers. According to Management, AI Services’s sales in Azure increased by 157% in the last quarter of the previous year and contributed to the total growth of 31% in cloud computing segment.
Management also said that the demand for AI services exceeded its capacity, which points out that it could grow even faster in the future. And Microsoft is certainly investing to take the opportunity. This year, 80 billion US dollars will invest in investment expenses, mainly in AI calculus centers. These growing expenses will support both the growing demand for the Azure Cloud platform and the own AI development from Microsoft.
For this purpose, Microsoft developed its AI assistants, called Copilot, for use on its various software platforms, including Github, Microsoft 365 and Dynamics 365. It also offers an independent copilot app. Companies can also use Microsoft’s Copilot Studio to use their own data and create their own AI agents to help them automate tasks and determine useful knowledge for workers. An early introduction of Copilot led to an increase in income and the expansion of margins for the productivity and business processes of Microsoft.
Microsoft may not grow as quickly as Palantir, but her shares will also act for a much more sensible growth for a much more sensible evaluation for a much more sensible assessment. You can currently buy the stock for less than 11 -times the aftercut. With a view to profit potentism, shares will act next year for around 29 times analyst estimates for the result per share. Nobody is particularly cheap, but these ratings have been under their average since the beginning of 2021. A company with a leadership in AI on two fronts certainly earns a bonus, and the current price is attractive to what you get.
After the recent sale, Microsoft looks like a much better purchase in both than Palantir share.
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Adam Levy Has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft and Palantir Technologies. The Motley Fool recommends the following options: Long January 2026 $ 395 calls at Microsoft and in short January 2026 $ 405 calls at Microsoft. The colorful fool has one Disclosure policy.
