META vs. PLTR: This is the Better AI Stock to Buy

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It did not take too long for the top AI stocks to make new highs after the subtle wobbles experienced by the tech scene in recent months. As the next chapter of the explosive AI story unfolds, investors may be wondering which AI plays could be next up to the plate to lead the pack to higher highs.

Undoubtedly, everyone wants to have a piece of the next Nvidia ( NASDAQ:NVDA ). And while there is no next Nvidia, at least in my humble opinion, I do think a new group of AI leaders could beat NVDA stock on the front of returns.

Sure, Nvidia's stock chart looks incredible, but investing is about what's up next and "what have you done for me lately?" rather than the gains that are already in the books. As growth investors seek to look ahead, perhaps an AI stock outside of the red-hot hardware scene makes the most sense.

Among the names to play the software side are Mark Zuckerberg's social-media empire Meta Platforms ( NASDAQ:META ) and Alex Karp's fast-rising AI software firm Palantir ( NASDAQ:PLTR ) are top candidates for investors looking to put down new money on an AI stock.

Year to date, both stocks have been off the races, with META and PLTR shares up 162% and 70%, respectively, at the time of writing. Undoubtedly, it seems quite risky to be buying after such significant runs. However, given their improving growth narratives and potentially timely catalysts that could kick in come 2025, the two names, I believe, stand out as AI horses still worth betting on.

Let's check in with each name to determine which AI stock could be the better bet for investors looking to play the long game.

• Meta and Palantir are top AI stocks that could lead the charge in 2025.
• If you're a value-conscious investor, Meta stock is tough to beat, even if Palantir has a longer runway for growth.
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Meta Platforms

Meta Platforms stock seems virtually unstoppable these days. Whether it's Zuck's new look (new hairstyle and stylish fashions), the new augmented reality (AR) glasses, or continued momentum on Meta AI, the stock seems to have exposure to all the hottest nascent technologies. And, as you'd imagine, the company seeks ways to monetize its new software and gadgets in a way that few tech titans are able to.

Arguably, Meta is one of the best AI software to pick up as the company continues to advance its LLaMA model while exploring ways for it to transform businesses and even industries.

With the company setting its sights on Brazil and the U.K. with Meta AI, it seems like Zuckerberg is on a mission to top OpenAI's ChatGPT. If there's one company that can beat OpenAI, it's Meta. It's pulling no punches on AI, and with that, I think it has a chance to land a knockout blow of sorts on its top AI rivals.

With analysts like KeyBanc's Justin Patterson hiking their price targets (to $665 from $560) over recent share appreciation and ad strength, it's hard to be sitting this AI stock out on the sidelines. Additionally, Patterson sees virtual reality efforts as leading to growth. He's right not to sleep on the metaverse. Even at 30.16 times trailing price-to-earnings (P/E), META is not an expensive stock.

Palantir

Palantir stock has almost been as hot as Nvidia on a year-to-date basis. If the parabolic melt-up continues, I wouldn't be surprised if PLTR closes off 2024 with bigger gains than the GPU maker. For many, the AI firm, which is trusted enough to do business with government organizations, is a newly-discovered AI superstar.

With the AIP (AI Platform) continuing to land deals, I don't see the growth stalling for the firm anytime soon, especially as commercial clients harness its full power. Perhaps my only concern with PLTR stock lies in the extended valuation.

At more than 103 times forward P/E and 41.7 times price-to-sales (P/S), the high-growth gem has suddenly become one of the priciest AI stocks in the market. As the company runs into its quarterly earnings, the stakes will be high. And if the numbers or outlook don't please, perhaps new investors will get a shot to pick up the fast-rising AI star at a nice discount.

Unless you're willing to pay a massive hand-over-fist premium for a shot at hyper-growth, I'd much rather go for Meta stock. It's a cheaper stock with room to command an even higher premium.

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