Artificial intelligence (AI) is a hot investment theme in 2023, with billions of dollars invested in the technology this year, and This resulted in a windfall profit for the company.
according to goldman sachsprivate investment in AI will reach $110 billion globally this year and could rise to a whopping $200 billion by 2025. Nvidia, microsoftand alphabet These are some of the obvious names that investors are flocking to to take advantage of this huge opportunity. At the same time, some small and medium-sized enterprises may benefit greatly from AI implementation because of the markets they serve.
Palantir Technologies (PLTR -1.34%) and sentinel one (S -0.42%) are two companies where AI is likely to be a major catalyst. While Palantir is a major player in the AI software platform market, SentinelOne is poised to take advantage of the growing deployment of AI in the cybersecurity niche.
But if you were to choose one of these two stocks to benefit from AI growth, which one should you buy? Let’s find out.
Palantir Technologies Case Study
Palantir Technologies is known for building and deploying software platforms for both government and commercial customers, and the company is now leveraging its expertise in the AI market as well. It is estimated that Palantir’s opportunity in the AI software platform market could be as large as $1 trillion in the long run, and the good thing is that the company is well positioned to take advantage of this opportunity. is.
That’s because a third-party research report ranks Palantir as the top vendor for AI, machine learning (ML), and data science solutions, ahead of the likes of Alphabet and Microsoft. More importantly, Palantir has already started winning AI-related contracts. In September, Palantir won a $250 million contract from the US Army to perform AI/ML-related research work. This was followed by his $115 million one-year extension of existing US military contracts to provide new AI capabilities.
At the same time, Palantir has significantly increased the number of commercial customers it serves thanks to the growing adoption of its AI platform. In just five months, the company’s AI platform was used by nearly 300 organizations across multiple industries. Not surprisingly, Palantir’s overall customer count grew 34% sequentially, driven primarily by a 45% year-over-year increase in its commercial customer base.
Additionally, Palantir is actively working to expand its AI sales funnel to commercial customers. So last month, the company conducted 140 boot camps, or training programs, to help potential customers understand how to implement AI into their use cases. These developments appear to be why Palantir has increased its full-year sales and operating profit outlook despite a softening government spending environment.
Palantir expects to end 2023 with revenue of $2.22 billion, an increase of 16.5% year over year. Even better, the company’s growth rate is expected to further improve from 2024 onwards.
Therefore, new catalysts such as AI could help Palantir stock maintain its outstanding momentum in the market after its 178% rally in 2023.
For SentinelOne
Cybersecurity companies are now focused on integrating generative AI within their products. That’s because spending on cybersecurity powered by generative AI is expected to jump from just $9 million in 2022 to $3.2 billion in 2027. This is an opportunity for SentinelOne to quickly strengthen its business and attract more cybersecurity customers.
SentinelOne already offers an autonomous AI-enabled threat prevention, detection, and response platform known as Singularity. The company can use the platform to target the enhanced detection and response (XDR) cybersecurity market, which is expected to grow 38% annually through 2028. At the same time, SentinelOne will begin selling its Purple AI-generated AI Cybersecurity Analyst to customers and incorporate the functionality into its Singularity platform.
According to SentinelOne, this generative AI-powered security solution enables an organization’s cybersecurity analysts to use text-based prompts to seek out, analyze, and ultimately respond to threats. You’ll be faster and more efficient. Market research firm Canalys predicts that by 2028, more than 70% of businesses are likely to deploy generative AI-based cybersecurity tools.
As a result, it’s no surprise that SentinelOne maintains impressive growth. The company’s fiscal year 2024 revenue forecast of $616 million is 46% higher than its fiscal year 2023 revenue of $422 million. Management believes SentinelOne can maintain its 30% revenue growth rate over the next two fiscal years.
But don’t be surprised to see the increasing adoption of generative AI in the cybersecurity niche driving SentinelOne’s strong growth. This could push this cybersecurity stock further higher following his 83% rise in 2023.
verdict
Both Palantir and SentinelOne have the potential to make sure their businesses soar thanks to AI. But investors who want to choose one of these AI stocks over the other have an easy decision to make.
Palantir’s stock trades at about 19 times sales, while SentinelOne’s stock trades at 13.5 times sales. SentinelOne is also growing at a much faster pace than Palantir. Moreover, as the graph in the article shows, SentinelOne is likely to continue to outperform his Palantir for years to come.
So investors looking to buy a well-growing, not-so-expensive AI stock right now might find it a better choice based on its rapid growth and performance when compared to Palantir. You may be tempted to purchase SentinelOne. Relatively attractive valuation.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.