Should You Move On From Palantir? Two Alternative AI Stocks to Consider
Palantir Technologies (NASDAQ: PLTR) has made waves as one of the standout stocks in early 2025. Despite its recent highs, the company’s stock has reached an astronomical valuation—currently trading at a staggering forward price-to-sales (P/S) ratio of 52 times the projected 2025 revenue estimates. This valuation comes amidst impressive revenue growth; in the last quarter, Palantir saw a 36% increase in revenue, buoyed by a remarkable 64% surge in U.S. commercial sales. The driving force behind this growth is Palantir’s innovative focus on the application and workflow layers of artificial intelligence (AI), aiming to serve as an AI operating system for organizations.
Palantir’s strategy involves leveraging AI boot camps to onboard new commercial clients efficiently. However, it’s crucial to recognize that more than 40% of the company’s revenue stems from government contracts, particularly from the U.S. Department of Defense (DOD). Unfortunately, the DOD is currently implementing severe cost-cutting measures, with the White House directing a budget reduction of 8% annually over the next five years. This dependence on government contracts presents a significant risk for Palantir as it navigates possible budget cuts.
Given this high valuation paired with substantial risks, it may be wise to explore two alternative AI stocks that offer a more attractive financial landscape.
Salesforce: Pioneering Agentic AI
Salesforce (NYSE: CRM) has long been a leader in customer relationship management (CRM) software. The company has innovatively expanded into automation, analytics, and workplace communication following recent acquisitions like Mulesoft, Tableau, and Slack. Notably, Salesforce is striving to lead the next wave of AI evolution—agentic AI.
While much of the early AI focus has been on generative AI—think AI crafting everything from text to images—Salesforce’s approach with agentic AI allows the technology to complete tasks with minimal human involvement. Imagine using AI to autonomously execute wedding plans, from booking venues to coordinating logistics. This is the future Salesforce envisions.
Through its Agentforce solution, Salesforce is making strides in agentic AI. The platform provides built-in AI agents and enables customers to create and customize agents via low-code and no-code tools. Boasting over 5,000 deals (3,000 of which are paying customers) since its October launch, Agentforce uses a consumption model priced at just $2 per engagement. If Salesforce can demonstrate significant cost savings for its clients, the company’s growth potential is considerable.
Moreover, Salesforce’s stock is trading at a relatively reasonable forward P/S ratio of under 7 and a P/E ratio of 26, making it an attractive option for investors.
SentinelOne: Innovating Cybersecurity
Another compelling choice is SentinelOne (NYSE: S), a rapidly growing AI-driven cybersecurity company with a significant catalyst on the horizon. Specializing in endpoint security for devices like computers and smartphones, SentinelOne offers its cutting-edge Singularity Platform powered by AI to predict, monitor, and mitigate cyber threats.
Competing primarily with CrowdStrike (NASDAQ: CRWD), SentinelOne has seized the opportunity to demonstrate the advantages of its technology, especially following recent disruptions faced by its competitor. One key differentiator is SentinelOne’s ability to automatically restore systems to pre-attack states, saving clients the hassle of labor-intensive recovery efforts—a feature that has attracted Fortune 50 companies to switch platforms.
SentinelOne is also seeing success in upselling its Purple AI solution, designed to aid analysts in identifying complex threats using natural language queries. Further enhancing its prospects is an upcoming partnership with Lenovo, which plans to ship all its PCs equipped with SentinelOne’s security software. Given that Lenovo is the world’s largest PC vendor, this partnership could be transformative for SentinelOne.
The stock is currently attractively priced, trading at a P/E ratio of under 5 times the fiscal 2026 analyst estimates, offering another potential avenue for savvy investors.
Conclusion
For those who may feel they missed their chance to invest in the high-flying AI stocks like Palantir, now is not the time to despair. With reasonable valuations and exciting growth potential, both Salesforce and SentinelOne present solid alternatives.
The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.
