Key Takeaways:
- Alphabet, Micron Technology, and Nvidia are three AI stocks that could be better picks than Palantir in 2026
- Alphabet covers nearly every base in AI, with a strong presence in cloud services, AI chips, and large language models
- Micron Technology is undervalued compared to Palantir, with a lower forward price-to-earnings multiple and a lower PEG ratio
- Nvidia offers a more attractive risk-reward proposition than Palantir, with similar growth rates but lower valuations
Introduction to AI Stocks
The artificial intelligence (AI) industry has been gaining significant attention in recent years, with many stocks experiencing substantial growth. One such stock is Palantir Technologies, which has seen its stock price soar nearly 140% after skyrocketing 340% in the previous year. However, according to Palantir CEO Alex Karp, "This remains the beginning, the first moment of a first chapter," indicating that there is still significant potential for growth in the industry. As we look to 2026, there are several AI stocks that could be better picks than Palantir, including Alphabet, Micron Technology, and Nvidia.
Alphabet’s AI Dominance
Alphabet, the parent company of Google, covers nearly every base in AI, making it a major player in the industry. As stated by the article, "Alphabet’s Google Cloud is the fastest-growing of the ‘big three’ cloud service providers." Google Cloud is a top choice for AI start-ups, with nearly all of the AI "unicorns" using its services. Additionally, Google’s large language models, such as Gemini 3.0 Pro and Gemini 3.0 Flash, are highly regarded, with Gemini 3.0 Pro ranking as the top large language model currently available, according to LMArena’s Leaderboard. Google has also integrated Gemini into its search engine, Workspace productivity suite, Chrome browser, and other applications, further solidifying its position in the AI industry.
Micron Technology’s Undervaluation
Micron Technology, on the other hand, is a member of the "memory oligarchy," supplying high-bandwidth memory (HBM) to the industry. As the article notes, "Micron is one of them – and it’s the only HBM manufacturer that’s based in the U.S." Micron’s stock is significantly undervalued compared to Palantir, with a forward price-to-earnings multiple of 9.2 compared to Palantir’s 181.8. Even when factoring in five-year earnings growth projections, Micron’s stock is more attractively valued, with a price-to-earnings-to-growth (PEG) ratio of 0.5 compared to Palantir’s PEG ratio of 2.8. As the article states, "You could make a pretty good case that Micron, therefore, is more important to the AI space than Palantir."
Nvidia’s Attractive Risk-Reward Proposition
Nvidia is another AI stock that could be a better pick than Palantir in 2026. The company reigns as the king of AI, with its GPUs remaining the most popular and powerful chips for AI processing. Nvidia’s growth rates are similar to Palantir’s, with revenue increasing 62% year-over-year in the third quarter of 2025. However, Nvidia’s quarter-over-quarter revenue growth in Q3 was 22%, compared to 18% for Palantir, and its guidance projects revenue will increase by 14% quarter-over-quarter in Q4, compared to Palantir’s expected increase of 12.5%. Despite similar growth rates, Nvidia’s valuations are lower than Palantir’s, making it a more attractive risk-reward proposition. As the article notes, "Nvidia appears to have an even greater wind at its back than Palantir."
Conclusion
In conclusion, while Palantir has seen significant growth in recent years, there are several AI stocks that could be better picks in 2026. Alphabet’s dominance in AI, Micron Technology’s undervaluation, and Nvidia’s attractive risk-reward proposition make them strong contenders. As the AI industry continues to grow and evolve, it’s essential to consider these alternative options when making investment decisions. As Keith Speights, a Motley Fool analyst, 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." With the potential for significant returns, it’s crucial to stay informed and consider the latest research and recommendations when investing in the AI industry.
https://finance.yahoo.com/news/3-artificial-intelligence-stocks-buy-120500787.html