Key Points
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SpaceX launched the biggest IPO ever, but the stock has slipped in the double digits since its market debut.
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The following AI stocks, like SpaceX, offer investors growth.
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Investors who favor Space Exploration Technologies (NASDAQ: SPCX) clearly prioritize growth. SpaceX soared into the stock market spotlight with its debut in June, the biggest initial public offering on record. Raising more than $85 billion and immediately joining the trillion-dollar club, SpaceX easily captured the attention of investors.
The stock, however, hasn’t performed as those investors may have expected: It’s declined 16% since it started trading. While investors like SpaceX’s growth, they may be less pleased with the company’s capital expenditures. In the recent quarter, capex came in at more than $19 billion, surpassing the company’s $14 billion in revenue.
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If you’re looking for growth, should you forget SpaceX and buy the following two artificial intelligence (AI) stocks instead? Let’s find out.
The case for Advanced Micro Devices
When you think of top AI chips, you may think of market leader Nvidia. But another company is also delivering enormous growth in this area. I’m talking about Advanced Micro Devices (NASDAQ: AMD). For years, this player has been a leader in the central processing unit (CPU) market — these are the chips found in all computers — but entered the AI chip market later than Nvidia.
Today, however, AMD is catching up nicely. The company has reported growth quarter after quarter, thanks to its progress in the area of graphics processing units (GPUs), or the chips that power key AI tasks. AMD confirmed this in the recent period, with record sales of AMD Instinct GPUs and AMD EPYC CPUs. And total data center revenue surged 97% to a record $8.5 billion.
This may look slim compared to Nvidia’s $89 billion in data center sales, but considering AMD’s commitment to AI chip development, I see this as an opportunity. AMD may find it easier from these levels to deliver tremendous growth than a company that already has the revenue levels of Nvidia. On top of this, the era of AI agents is here, and this software relies on both CPUs and GPUs. All of this could supercharge growth at AMD.
The case for Palantir Technologies
Palantir Technologies (NASDAQ: PLTR) once was a software company mainly tied to government contracts. But in recent years, even as government revenue climbed, another source of revenue showed its strength: the commercial customer. And for the first time ever, in the third quarter, Palantir’s revenue from U.S. commercial customers surpassed its revenue from the U.S. government. The former rose 148% to $984 million, while the latter advanced 96% to $953 million.
The reason behind this? A few years ago, Palantir launched its Artificial Intelligence Platform (AIP), integrating the power of large language models into its system of aggregating a customer’s data and putting it to work for that customer. Companies and organizations are eager to get in on AI and apply it to their needs — and AIP allows them to do this easily and almost overnight.
All of this has resulted in tremendous revenue gains for Palantir and a fantastic balance between growth and profitability, as we can see through its Rule of 40 score of 158%. A score of 40% or above is positive.
And the future looks bright for Palantir: As AI is used more regularly to address real-world problems, companies and the government may rush to deploy AIP rather than start from scratch to develop an AI platform.
Should you buy these stocks instead of SpaceX?
If you’re looking for a growth opportunity, AMD and Palantir offer this — along with profitability. They also present less risk than SpaceX for two clear reasons. They don’t have to heavily invest in an AI infrastructure build-out, and they don’t depend on technologies that haven’t yet been proven to meet future goals.
That said, AMD and Palantir aren’t dirt cheap.
AMD PE Ratio (Forward) data by YCharts
Their valuations are high, which means they aren’t the right choice for every investor. And even some aggressive investors may prefer to keep them on the watch list and buy on the dip.
Also, these stocks aren’t risk-free. Any slowdown in the AI story could weigh on earnings and stock performance. But with the long-term AI story intact, they make better buys than SpaceX for the aggressive investor seeking growth.
Should you buy stock in Advanced Micro Devices right now?
Before you buy stock in Advanced Micro Devices, consider this:
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, Palantir Technologies, and Space Exploration Technologies. The Motley Fool has a disclosure policy.
