While everyone is mesmerised by Palantir’s glittering stock chart, a fascinating analysis from places like The Motley Fool suggests we should be looking elsewhere. The question isn’t just about who is winning today, but who has the engine to win the marathon. Let’s dig into why two seemingly less glamorous players, Alibaba and AMD, might just leave Palantir eating their dust by 2026.
The Palantir Paradox: Spectacular Growth at an Eye-watering Price
You can’t argue with Palantir’s recent performance. It’s been a monster. After a 340% tear in 2024, the stock has already surged another 148% year-to-date in 2025. The company’s fundamentals look solid on the surface, posting a “Rule of 40” score of 114 (revenue growth of 63% plus an adjusted operating margin of 51%), which is, frankly, astounding.
But here is where the story gets a bit wobbly. Investors have priced this company for beyond-perfection. It is currently trading at a mind-boggling 100 times its projected 2026 revenue and a dizzying 250 times forward earnings. That isn’t just optimism; it’s a belief in sustained, flawless execution that few companies in history have ever managed. With a market capitalisation of $448 billion, Palantir looks a lot like a high-performance racing car that’s redlining its engine. It’s incredibly fast, but can it maintain that pace without blowing a gasket?
Alibaba: The Sleeping Dragon of Cloud AI
Remember Alibaba? The e-commerce behemoth that seemed to lose its way? Well, while investors were focused on its retail struggles, Alibaba was quietly building a formidable engine in a completely different race: the cloud computing stocks Grand Prix. The company has poured a staggering 120 billion yuan (about $17 billion) into its AI and cloud infrastructure, and the results are starting to speak for themselves.
Here’s the kicker: Alibaba’s AI services revenue has grown at a triple-digit pace for nine consecutive quarters. Its overall cloud revenue jumped 34% in the last quarter, powered almost entirely by AI demand. Despite this explosive growth in a critical sector, the company trades at a forward P/E ratio of less than 24.
Compare that to Palantir’s 250x. Alibaba’s AI valuation suggests it’s a powerful workhorse being sold at the price of a Shetland pony. With a current market cap of $352 billion, it doesn’t need a miracle to close the gap on Palantir; it just needs the market to wake up and look under the bonnet.
AMD: The Chip Challenger Turning into a Champion
The AI revolution is built on one thing: silicon. And for years, Nvidia has been the undisputed king of that world. But the narrative of AMD as a mere budget alternative is dangerously out of date. AMD is making a serious play for the throne, and its strategy is rooted in the explosive semiconductor growth fuelling data centres everywhere.
AMD’s forecasts are bullish, to put it mildly. The company anticipates 60% average annual growth in its data centre business and a staggering 80% growth in AI-specific solutions over the next few years. They aren’t just hoping to compete; they are planning to dominate. As one report from The Motley Fool notes, AMD is aiming to capture at least 10% of what it believes will be a $1 trillion AI compute market by 2030.
With its upcoming Instinct MI450 accelerator series, AMD is set to narrow the performance gap with Nvidia significantly. Yet, at a $360 billion market cap and trading at a forward P/E of around 55 (or just 21 times its 2027 earnings forecast), AMD’s stock price doesn’t seem to fully reflect this immense potential.
Why Infrastructure is the Real Kingmaker
Ultimately, this isn’t just a story about three companies. It’s a story about the fundamental tech investment trends shaping our future. AI models, like those Palantir sells, are the glamorous front-end application, but they are utterly dependent on two things:
– Massive cloud infrastructure to host and run them.
– Incredibly powerful semiconductor chips to do the number-crunching.
This is where the strategies of Alibaba and AMD converge. They aren’t just selling AI software; they are building the very foundations of the AI economy. Investing in Palantir is a bet on a single, albeit brilliant, application provider. Investing in Alibaba and AMD is a bet on the picks and shovels of the AI gold rush. Historically, that’s often been the smarter play.
The Final Word: Hype vs. Horsepower
When we look at AI stock predictions, it’s easy to get swept up in the narrative of the moment. Palantir has masterfully captured the market’s imagination. But its valuation demands perfection, leaving no room for error.
Meanwhile, Alibaba and AMD present a different proposition. They are legacy tech giants that have successfully pivoted to become essential infrastructure players in the AI revolution. Their growth is explosive, their strategies are sound, and their valuations are, by comparison, far more grounded in reality.
It’s a provocative thought, but the numbers suggest it’s a plausible one. By 2026, we may well look back and see that the real winners weren’t the ones making the most noise, but the ones quietly building the engine that powered the entire industry forward.
So, as you assess the market, ask yourself: Are you betting on the dazzling sprinter running at a pace that seems impossibly fast, or are you backing the marathon runners who are building sustainable power, bit by bit, chip by chip, server by server? I’d love to hear your take in the comments below.
