Palantir CEO's 10 Words About AI That Should Help You Invest Better in 2025 and Beyond

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In early November, Palantir Technologies (NASDAQ: PLTR) released a robust third-quarter 2024 report. Alex Karp, CEO of the artificial intelligence (AI)-powered data analytics company, included a statement in the press release. It has a sentence I believe investors should keep at the forefront of their minds when they make investing decisions in 2025 and beyond.

In the context of his full statement, he means the AI haves will be winners, and the AI have-nots will be losers. He’s talking in a very broad sense — from companies to countries. This black-and-white proclamation is much stronger than the usual comments one hears about how important AI will be.

Why should investors give any power to Karp’s word? Beyond his seemingly being extremely bright, even in Silicon Valley terms, here’s a great reason: Palantir stock’s gain of 341%, which crushed the S&P 500‘s 25% return, made it 2024’s best-performing stock on the S&P 500 index. This performance stems from the company’s robust quarterly results and guidance easily beating Wall Street’s expectations and investor enthusiasm about its long-term growth prospects.

Topping the S&P 500 index’s best-performers list would be a great feat for any company at any time. But doing so soon after going public (Palantir’s initial public offering was in September 2020) is extremely rare, perhaps even unprecedented.

So, what stocks — beyond Palantir, which is one of the best AI stocks — do I think investors should favor if they keep Karp’s statement in mind when choosing stocks to buy?

If we accept that AI is so critical that “the world will be divided between AI haves and have-nots,” it naturally follows that whatever company leads in supplying AI technology will be a massive winner, assuming the market does not get too fragmented and become commoditized.

Currently, that company is Nvidia (NASDAQ: NVDA), whose stock has already been a huge winner. However, along with the AI market, it still has much room to grow significantly over the long term. The company’s graphics processing units (GPUs) dominate the advanced AI chip market.

But Nvidia is so much more than just a chip or hardware supplier. It supplies entire solutions or platforms comprising hardware, software, and other tools for its target markets (data center, professional visualization, gaming, and auto/robotics). This full-stack strategy, along with its partnering with numerous top companies, gives Nvidia a competitive advantage.

Another thought that naturally flows to my mind from Karp’s statement relates to the importance of company size. In many industries, larger companies have long had a competitive advantage over smaller ones as they benefit from economies of scale. They also usually have more resources to make acquisitions and fund research and development initiatives.

If we accept that AI will be so critical that it separates the winners from the losers across the economy, the advantage that many large companies already enjoy should become turbocharged. Larger companies will generally have more resources to spend on obtaining the best AI capabilities — and Nvidia’s GPUs are very expensive, as is hiring top AI talent.

This point suggests it could be wise for investors to favor the big tech companies even more so than in the recent past. Along with Nvidia, those companies include Apple, Amazon, Alphabet, Microsoft, and Meta Platforms. Electric vehicle (EV) pioneer Tesla is also often included as a big tech company because it’s heavily involved in AI.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Palantir CEO’s 10 Words About AI That Should Help You Invest Better in 2025 and Beyond was originally published by The Motley Fool