When Anthropic’s stock hits the market next week, I’m sure there’ll be a mad rush to buy it. This is a special company and with its valuation falling to $1.3trn, the price tag doesn’t look crazy given its spectacular revenue growth.
However, I’m wondering if another AI stock could offer more potential over the next couple of years. With a much lower market-cap, and a much higher level of profitability, could it be the smarter play?
Anthropic could underperform
While Anthropic’s valuation has come down significantly, there’s a decent chance its stock could underperform in the medium term. One reason I say this is that the company’s losing money hand over fist today.
In the first nine months of 2026, for example, it generated a net loss of $104bn. If it keeps racking up big losses, investors are likely to punish the stock at some stage.
Another reason is that blockbuster IPO stocks often tend to tank after the IPO hype dies down. This year, we’ve seen this pattern with both SpaceX and Cerebras Systems.
If history’s anything to go by, Anthropic stock will shoot up initially and then fall in the months ahead as investors focus more on the fundamentals. This is a very common IPO pattern.
Now, I’m not saying that the IPO isn’t worth considering – it definitely could be now that the valuation’s lower. I just think that plenty of other stocks will outperform Anthropic in the medium term.
Another fast-growing AI company with potential
One AI stock I reckon could outperform Anthropic over the next one to two years is Palantir (NASDAQ: PLTR), which offers solutions designed to help organisations get more from their data and currently has a market-cap of around $400bn. Like Anthropic, it’s also growing at a prolific rate as enterprises adopt its technology.
In Q3, for example, revenue was up 96% year on year to $2.3bn. With the exception of Anthropic, that kind of top-line growth from an established company is pretty much unheard of.
There has seldom been another enterprise in postwar America that has grown at the scale and speed of our own. Our company generated $2.3bn in revenue in the third quarter of the year, representing an absolutely striking 96% growth rate over the same period the year before.
Palantir Q3 results
The key difference between the two companies however, is that Palantir’s insanely profitable. Last quarter, GAAP income from operations was $1.09bn, representing a 47% margin, while adjusted income from operations was $1.43bn, a 62% margin.
The reason it’s more profitable is that it isn’t spending a fortune on compute like Anthropic. While Anthropic is spending hundreds of billions of dollars on AI infrastructure, Palantir operates an asset-light software model that keeps its costs quite low.
Given the growth and profitability, and the fact that the stock’s down from its recent highs, I believe Palantir’s worth considering as a growth investment. Taking a medium-term view, I reckon there’s a decent chance it’ll do well.
There are risks around a slowdown in AI spending and its valuation (its price-to-earnings ratio is 67). However, if earnings continue to surge, the company’s going to grow into its valuation quickly.
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Edward Sheldon owns shares in Palantir and SpaceX.
This story originally appeared on Motley Fool
