Comparing AI Strategies: Palantir vs. Snowflake – Who Comes Out on Top?

In the world of artificial intelligence (AI), two companies are taking very different approaches to compete in the space: Snowflake and Palantir Technologies. While both are making strides in AI, their strategies and outcomes couldn’t be more different.

Palantir, long considered a government contracting business, has surprised many with the success of its Palantir Artificial Intelligence Platform (AIP). The company has seen significant growth in customer acquisition, with its non-government operations leading the way. Palantir has also demonstrated disciplined financial operations, reporting profits on a GAAP basis and ending 2023 with a strong balance sheet.

On the other hand, Snowflake, once a darling of venture capitalists and renowned for its innovative data warehousing service, has seen its growth narrative cool since going public. The company’s revenue growth has slowed, and its net revenue retention has declined in eight consecutive quarters. Snowflake’s lack of urgency surrounding AI, highlighted by its recent acquisition of Neeva and subsequent silence on its AI strategy, has raised concerns about its future in the AI landscape.

In terms of valuation, Palantir holds the highest price-to-sales (P/S) ratio among growth SaaS stocks, reflecting its premium valuation. Snowflake, on the other hand, is facing uncertainties and challenges that have led to a decline in its stock price.

Overall, with strong revenue growth, profits, customer acquisition, and a clear AI vision, Palantir appears to be the clear winner compared to Snowflake. Investors may want to consider building a position in Palantir or adding to an existing allocation, while approaching Snowflake with caution given its current challenges and uncertainties in the AI space.