Key Takeaways:
- Nvidia and Palantir are leading the charge in the AI revolution, with Nvidia adding over $4.2 trillion in market value and Palantir’s shares skyrocketing by over 2,500% in the past three years.
- The companies’ sustainable moats, including Nvidia’s graphics processing units (GPUs) and Palantir’s AI-driven software-as-a-service platform, have contributed to their success.
- Insiders at Nvidia and Palantir have been net sellers of their shares, with over $3.3 billion worth of stock sold in 2025, raising potential red flags for the new year.
- The lack of insider buying and high price-to-sales ratios for both companies may signal that their shares are not attractive, despite their leading positions in the AI market.
Introduction to the AI Revolution
The AI revolution has been a driving force behind the significant gains in the S&P 500 index over the past three years, with Nvidia and Palantir being two of the leading companies in this space. As noted in the article, "Empowering software and systems with the ability to make split-second decisions without the need for human oversight is a technological leap forward that can eventually add trillions to global gross domestic product (GDP)." The success of these companies can be attributed to their well-defined sustainable moats, which have enabled them to maintain a competitive edge in the market.
Sustainable Moats
Nvidia’s GPUs are the preferred choice for AI-accelerated data centers, with its Hopper, Blackwell, and Blackwell Ultra chips accounting for 90% or more of the GPUs currently deployed in enterprise data centers. As the article states, "No externally developed GPUs have come particularly close to matching the compute capacity of what Nvidia’s GPUs bring to the table." Additionally, Nvidia’s CUDA software platform has played a crucial role in its success, keeping clients loyal to the brand. Palantir, on the other hand, is an AI-applications business that lacks a one-for-one replacement at scale, with its lead operating segment, Gotham, being an AI-driven software-as-a-service platform used by the U.S. government and its allies.
Insider Activity
Despite the companies’ success, insiders at Nvidia and Palantir have been net sellers of their shares, with over $3.3 billion worth of stock sold in 2025. As the article notes, "The persistent lack of insider buying that we’ve observed with Nvidia and Palantir speaks volumes." The lack of insider buying, coupled with billions of dollars in annual insider selling, may signal that neither Nvidia nor Palantir shares are attractive. As the article quotes, "The only reason an insider would buy shares is if they believe the stock will head higher."
Market Trends and Valuations
The AI trend has been a dominant force in the market for three years, but history has shown that no next-big-thing technology trend has avoided an early innings bubble-bursting event. The article notes that "price-to-sales (P/S) ratios above 30 for companies heralding the charge of a game-changing innovation aren’t sustainable over long periods." Nvidia’s P/S ratio briefly topped 30 in early November, while Palantir’s P/S ratio is currently at 110, raising concerns about the sustainability of their valuations.
Conclusion
In conclusion, while Nvidia and Palantir have been leading the charge in the AI revolution, the actions of insiders and market trends may signal that their shares are not as attractive as they seem. As the article states, "The people who know Nvidia and Palantir best are speaking volumes with their actions." Investors should exercise caution and consider the potential risks and challenges facing these companies, despite their strong track records and competitive advantages.
https://www.fool.com/investing/2026/01/06/ai-stocks-nvidia-pltr-33-billion-warning-wall-st/