Nvidia or Palantir? Morgan Stanley Makes a Bold AI Stock Call That Could Shape Portfolios in 2025
Find out which AI powerhouse Morgan Stanley sees as the ultimate buy for 2025 and why this stock could reshape your investment strategy.
- Nvidia’s market cap: $3.45 trillion—largest U.S. company
- Palantir’s 3-year performance: Soared 1,291%
- Global AI market forecast: $189B (2023) reaching $4.8T by 2033
- Nvidia 1Q26 revenue: $44.1B, up 69% YOY
The artificial intelligence (AI) boom is dominating the headlines—and for investors, the stakes have never been higher. With forecasters from UN Trade & Development projecting the AI market to surge from $189 billion in 2023 to a staggering $4.8 trillion by 2033, the race to identify the top stocks in this unstoppable sector is intensifying.
Now, Morgan Stanley’s experts have weighed in with a verdict that’s set to ignite debate among Wall Street watchers: of all the AI darlings, Nvidia and Palantir are in a league of their own—but only one gets the bank’s buy rating for 2025.
Why Is Nvidia Still the King of AI Stocks?
Few companies ride the AI wave with the power and consistency of Nvidia. Once famous for its gaming GPUs, Nvidia is now the nerve center of the AI hardware revolution. Its high-performance chips are the brains behind countless AI applications in data centers, cloud computing, autonomous driving, and more.
Shareholders have reaped the rewards—Nvidia’s stock price rocketed 660% in just three years, riding the momentum of ChatGPT’s launch and the AI gold rush it triggered.
But recent volatility has sparked concerns. After an extraordinary rally, Nvidia’s shares have cooled somewhat in 2024, with global supply chain and tariff tensions putting pressure on the chip market. However, signs of a thaw between China, the EU, and the White House over trade deals could ease these risks in the coming months.
Meanwhile, Nvidia continues to expand its technological lead. This May, the company made headlines with the ABCI-Q, the world’s largest quantum AI supercomputer, and its groundbreaking Blackwell architecture, which scored top marks in the MLPerf Training benchmarks—all strong signals that Nvidia’s innovation machine isn’t slowing down.
The company’s most recent earnings speak volumes:
– Revenue soared to $44.1 billion in Q1 2026, up an eye-popping 69% year-over-year.
– Data center revenue hit $39.1 billion, the main engine behind this surge.
– Gross margins now approach 61%, and CEO Jensen Huang affirmed that demand for AI infrastructure is “incredibly strong.”
Morgan Stanley’s star analyst Joseph Moore underlines the positive outlook, highlighting improving gross margins and sky-high customer demand for Nvidia’s next-gen tech.
Q&A: What Makes Palantir a Compelling AI Bet?
Palantir Technologies, founded by Peter Thiel, has carved out a powerful niche in AI-powered data analytics and government contracts. Its AI Platform (AIP) allows users to harness high-level AI insights without the heavy lift of coding—opening advanced analytics to a broad user base.
The stock has soared a jaw-dropping 1,291% over three years, outpacing almost all competitors. Major clients include Stellantis, BP, and the U.S. Department of Defense, with Palantir’s $795 million Army contract extension through 2029 reinforcing its vital government ties.
In Q1 2025, Palantir posted revenues of $883.9 million—a 39% year-over-year jump—while closing 31 deals worth $10 million or more. Its “rule of 40” (revenue growth plus operating margin) sits at an elite 83%.
Yet, Morgan Stanley’s Sanjit Singh urges caution. Despite operational excellence, Palantir’s valuation is now stretched, trading at a lofty 95x forecasted 2027 free cash flow. Analyst consensus tilts toward a “Hold,” with 18 recent recommendations: 3 Buys, 11 Holds, and 4 Sells. Forecasts point to a potential 22% downside over the next year, suggesting investors may want to wait for a better entry.
How Does Morgan Stanley Stack These AI Leaders Up?
Morgan Stanley recognizes both companies as front-runners in AI, but the choice is crystal clear: Nvidia is the preferred play for 2025.
Here’s why:
– Stronger analyst consensus: Nvidia boasts a “Strong Buy” rating across 40 reviews versus Palantir’s muted Near-Neutral sentiment.
– Earnings momentum: Nvidia’s stellar quarter and bullish guidance stand out amid sector headwinds.
– Innovation edge: Breakthroughs in quantum computing and AI architecture strengthen Nvidia’s tech leadership.
While Palantir dazzles with growth and government deals, its skyrocketing valuation makes it a risky near-term bet.
How Can You Invest in the Top AI Stocks Smartly?
Thinking about adding AI exposure to your portfolio? Here’s how:
– Research analyst ratings on trusted platforms like TipRanks and Bloomberg.
– Diversify—don’t bet solely on one sector or stock.
– Monitor trade and macroeconomic trends, as supply chain and regulatory shifts can drastically impact tech stocks.
– Wait for attractive entry points—especially for high-flyers like Palantir.
What Other Sectors Are Set for AI-Driven Growth?
AI’s transformative reach is expanding beyond tech:
– Content creation and publishing
– Automotive (autonomous vehicles)
– Healthcare analytics
– Energy and smart infrastructure
For more on sector trends, check out CNBC or Reuters.
What’s the Bottom Line? Nvidia Comes Out on Top
For 2025, Morgan Stanley firmly backs Nvidia as the best AI stock pick. The company’s relentless innovation, robust earnings, and analyst confidence give it a commanding edge.
Ready to ride the AI wave? Review your portfolio and keep an eye on Nvidia’s next moves!
2025 AI Stock Winners Checklist:
- ✅ Monitor Nvidia’s earnings and product launches
- ✅ Track Palantir’s contract wins and valuation
- ✅ Watch global trade and tech regulation headlines
- ✅ Diversify your AI investments
- ✅ Use reputable research from Bloomberg, TipRanks, and CNBC
