Palantir Technologies (NASDAQ:PLTR) experienced a 4.3% decline in morning trading on July 8, 2026, settling at $128.65 per share, while Nvidia Corp (NASDAQ:NVDA) saw a modest 1.2% increase to $199.32. The contrasting movements come as the two companies intensify their push into government AI solutions, reigniting discussions around Palantir's valuation, which currently stands at approximately $331 billion.
Morningstar analyst Mark Giarelli noted that as of June 30, Palantir was trading 24% below Morningstar's fair value estimate of $153. However, with the recent price uptick, that discount has narrowed to roughly 16%. Morningstar maintains its narrow moat rating and very high uncertainty rating on the stock.
Palantir's current price-to-earnings ratio sits at 144.6, while Nvidia's P/E is 30.3. The stock has fallen over 40% from its 2025 highs, trading at about 43 times the midpoint of its 2026 revenue outlook of $7.65 billion to $7.66 billion.
The core of the debate centers on Palantir and Nvidia's joint product, announced on June 29, designed to run Nvidia AI and Nemotron open models within sovereign systems. Targeting U.S. government agencies and critical infrastructure, the tool promises enhanced security for classified or air-gapped environments. Palantir CEO Alex Karp emphasized that the product should eliminate underlying security risks, while Nvidia CEO Jensen Huang called open-source AI foundational to national security.
Palantir's government revenue reached $858.4 million in Q1 2026, a 76% year-over-year increase, while commercial revenue grew 95% to $774.2 million. U.S. government sales specifically totaled $687 million, only $92 million ahead of U.S. commercial revenue of $595 million, which grew at a faster 133% rate. The Nvidia deal is seen as crucial for Palantir to convert sensitive AI projects into steady software sales, potentially easing valuation concerns if successful.
Investors are closely watching whether the $92 million advantage for U.S. government revenue over U.S. commercial revenue will persist, expand, or diminish. Palantir has guided for second-quarter 2026 revenue of $1.797 billion to $1.801 billion.
On the commercial front, Palantir announced its first named client in Latin America, GNP Seguros, which will use Foundry and AIP for claims fraud detection, underwriting, and risk data analysis. The deal's value was not disclosed.
Seeking Alpha contributor James Foord rates Palantir a Strong Buy, projecting government revenue could reach an annual run rate of $6 billion to $7 billion within two years. He holds long positions in both Palantir and Nvidia.
