Bull Market Completes 2 Years on AI Surge; NVIDIA & PLTR Stocks Shine

Wall Street celebrated the bull market’s second anniversary last week, with the S&P 500 ending at record highs. Since Oct. 12, 2022, the broader S&P 500 has soared more than 60% after hitting a closing low of 3,577.03, per the Dow Jones Market Data. 

The bull market has hardly shown any sign of slowing down in the past two years, mostly due to a resilient U.S. economy and the advent of artificial intelligence (AI). The AI euphoria, in particular, is expected to drive the S&P 500 higher into the year-end and next year. The extensive adoption of AI is expected to boost real GDP growth, increase earnings per share (EPS), and improve the S&P 500’s fair value.

AI boom is here to stay since it is based on practical applications. AI can be utilized to increase product efficiency and curtail costs. Two prominent S&P 500 stocks that made the most of the AI revolution are NVIDIA Corporation NVDA and Palantir Technologies Inc PLTR. 

NVIDIA is known for providing technologies essential for AI applications. The company’s graphic processing unit (GPU) is integral to the computer server infrastructure for training large language models and functioning AI interfaces. Palantir’s AI software, on the other hand, is widely used, and its Artificial Intelligence Platform (AIP) has been a huge success. 

Shares of NVIDIA and Palantir skyrocketed 1002% and 433.9%, respectively, over the past two years. Shares of these tech players are further expected to scale upward, banking on the AI jubilation and more. Let’s have a look –

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2 Bullish Reasons to Drive NVIDIA Stock 

The Biden administration’s initiative to cap U.S. chip exports to certain countries is surely a dampener for NVIDIA, but the fierce demand for Blackwell chips would boost its share price. 

CEO Jensen Huang recently said that there is an insane demand for Blackwell chips, which are in full production. The high-end Blackwell B200 chip has more AI throughput than the present Hopper H100 chip, leading to increased demand from companies like Microsoft Corporation MSFT, Alphabet Inc. GOOGL and Meta Platforms, Inc. META.

Dominance in the GPU market space is another tailwind for the NVIDIA stock. NVIDIA holds more than 80% of the GPU market, which is poised to reach $1,414.39 billion by 2034 from $75.77 billion this year, per Precedence Research. 

Developers are more inclined toward NVIDIA’s more efficient CUDA software platform than Advanced Micro Devices, Inc.’s AMD ROCm software platform. Hence, the $2.81 Zacks Consensus Estimate for NVIDIA’s earnings per share is up 72.4% from a year ago.

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Bullish Factor to Drive PLTR Stock 

Palantir is one of the hottest AI players and is largely associated with government contracts. The software company is known for helping the government aggregate its data to save costs and gain efficiency. 

However, lately, Palantir has gained interest from commercial customers due to the launch of AIP. In the company’s latest quarterly results, commercial revenues in the United States climbed 55% to $159 million, and customer count in the commercial space jumped 83% to almost 300, thanks to the demand for AIP. Notably, Palantir had only 14 U.S. commercial customers four years back.

Palantir’s traditional government revenues also improved 23% in the quarter. Thus, persistent demand for Palantir’s AIP, which stands out from the pack, will propel its share prices upward. And with the AI market poised to hit $1 trillion in 10 years, Palantir’s shares stand to gain significantly in the long run. As a result, the $0.36 Zacks Consensus Estimate for PLTR’s earnings per share is up 33.3% from a year ago.

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Lower Interest Rates Are a Boon for NVDA & PLTR

One of the common factors that will drive the share prices of NVIDIA and Palantir is the Federal Reserve’s recent move to trim interest rates by 50 basis points in its latest monetary policy meeting. The Fed slashed interest rates after more than two years and penciled in more similar rate cuts soon amid tamed price pressures.

Now, interest rate cuts bode well for tech players like NVIDIA and Palantir as they curtail the cost of borrowings and jack up profit margins. Similarly, rate cuts don’t hinder cash flows, which are essential for both the company’s growth initiatives.

Thus, the highest short-term price target offered by brokers for NVDA stock is $200, an upside of 44.9% from the last closing price of $138.07. Analysts’ highest short-term price target for PLTR stock is $50, up 15.2% from the last closing price of $43.40.

NVIDIA stock currently flaunts a Zacks Rank #2 (Buy), while Palantir has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Names #1 Semiconductor Stock

It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.

With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.

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