Key Takeaways
- Alphabet is a more comprehensive AI stock than Palantir, covering nearly every base in the industry.
- Micron Technology is a more affordable option than Palantir, with a lower forward price-to-earnings multiple and a more attractive risk-reward proposition.
- Nvidia is growing at a similar rate to Palantir, but offers a more attractive valuation and a better risk-reward proposition.
Introduction to AI Stocks
As we begin the new year, many investors are looking to artificial intelligence (AI) stocks as a potential source of growth. One stock that has received a significant amount of buzz in 2025 is Palantir Technologies (NASDAQ: PLTR), which soared nearly 140% after skyrocketing 340% in the previous year. However, according to the article, "This remains the beginning, the first moment of a first chapter," as stated by Palantir CEO Alex Karp in a letter to shareholders in November. While Palantir may be a promising AI stock, there are other options that could be better picks for investors in 2026.
Alphabet: A Comprehensive AI Stock
One of these options is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google. As the article notes, "Alphabet covers nearly every base in AI," making it a more comprehensive stock than Palantir, which focuses primarily on software. Google Cloud is the fastest-growing of the "big three" cloud service providers, and is a top choice for AI start-ups, with nearly all of the AI "unicorns" (start-ups that have a market cap of $1 billion or more) using Google Cloud. Additionally, Google’s Gemini 3.0 Pro ranks as the top large language model (LLM) currently available, according to LMArena’s Leaderboard. As the article states, "Google has also integrated Gemini into its search engine, Workspace productivity suite, Chrome browser, Antigravity platform for developing AI agents, and other applications."
Micron Technology: A More Affordable Option
Another option that could be a better pick than Palantir is Micron Technology (NASDAQ: MU). As the article notes, Micron is a member of what some refer to as the "memory oligarchy," and is the only high-bandwidth memory (HBM) manufacturer based in the U.S. While Palantir’s AI software is important, it relies on powerful chips, which in turn rely on high-bandwidth, low-latency memory. As the article states, "You could make a pretty good case that Micron, therefore, is more important to the AI space than Palantir." However, even without making this argument, Micron’s valuation is more attractive than Palantir’s, with a forward price-to-earnings multiple of 9.2 compared to Palantir’s 181.8.
Nvidia: A Strong Competitor to Palantir
Finally, Nvidia (NASDAQ: NVDA) is another AI stock that could be a better pick than Palantir. As the article notes, Nvidia is the "king of AI," with its GPUs remaining the most popular (and most powerful) chips for AI processing. Nvidia’s growth rate is similar to Palantir’s, with revenue soaring 62% year-over-year in the third quarter of 2025, compared to Palantir’s 63%. However, Nvidia’s valuation is more attractive, with a lower price-to-earnings ratio and a more attractive risk-reward proposition. As the article states, "Nvidia appears to have an even greater wind at its back than Palantir," with quarter-over-quarter revenue growth of 22% in Q3, compared to 18% for Palantir.
Conclusion
In conclusion, while Palantir may be a promising AI stock, there are other options that could be better picks for investors in 2026. Alphabet, Micron Technology, and Nvidia all offer attractive valuations and growth prospects, making them worth considering for investors looking to invest in the AI industry. As the article notes, "The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them." However, with its strong growth rate and attractive valuation, Nvidia could be a great option for investors looking to invest in the AI industry.
https://www.nasdaq.com/articles/3-artificial-intelligence-stocks-buy-2026-could-be-better-picks-palantir