Palantir’s AI rally has been impossible to ignore. But on Wall Street, attention is already shifting away from last year’s winner and toward the companies quietly shaping what AI looks like at scale.
According to recent analyst rankings from Morningstar, the most attractive artificial intelligence stocks heading into 2026 aren’t flashy application-layer plays. They’re Nvidia and Microsoft — two firms analysts believe remain undervalued despite their size.
Palantir didn’t make the cut.
Palantir’s Problem: Expectations Are Now the Enemy
Palantir shares have surged roughly tenfold since early 2024, driven by enthusiasm around AI-driven government and enterprise contracts. The technology still excites analysts. The valuation does not.
Morningstar’s view is blunt: the stock now prices in years of near-perfect execution. Any slowdown in contract growth, margins, or government spending could hit hard. That risk profile is why Palantir slipped off the firm’s list of top AI buys — not because the business is weak, but because the bar has been raised too high.
Nvidia Is Still the AI Economy’s Load-Bearing Wall
If AI has an operating system, Nvidia sits beneath it.
Analyst Brian Colello describes Nvidia as having a “wide economic moat,” built not just on GPUs, but on an entire AI stack that competitors struggle to replicate. Nvidia designs the chips, the interconnects, the networking hardware — and crucially, the software that makes it all usable.
That software layer, CUDA, has been refined for nearly two decades. It’s now so embedded in AI development that switching away from Nvidia often costs more than staying, even when rival chips appear cheaper on paper.
Here’s the data point that matters: analysts estimate Nvidia controls more than 90% of the data-center GPU market, a segment projected to grow at a mid-30% annual rate through the early 2030s. Wall Street expects Nvidia’s earnings to compound at nearly 50% annually through 2028.
Against that backdrop, a forward valuation near 47 times earnings looks less stretched — and more like a premium toll on the entire AI economy.
Microsoft’s AI Advantage Is Quiet — and Ruthless
Microsoft’s AI strategy doesn’t scream. It spreads.
Instead of selling AI as a standalone product, Microsoft has fused it into software businesses already used daily by corporations. Microsoft 365 Copilot is being adopted at a pace executives say is faster than any prior enterprise product launch. More than 90% of Fortune 500 companies are already using it in some form.
Underneath that rollout sits Azure.
Azure is now the world’s second-largest cloud platform, and analysts say its real strength is friction removal. Enterprises can test, deploy, and scale AI without rewriting their infrastructure — a decisive advantage in cautious boardrooms.
The OpenAI Flywheel
Microsoft’s partnership with OpenAI adds a financial kicker most investors still underestimate.
Microsoft owns a significant equity stake in OpenAI and holds exclusive rights to its most advanced models, including GPT-4 and GPT-5. Under the deal, OpenAI shares a portion of its revenue with Microsoft — a stream industry reports suggest now exceeds $1 billion annually, roughly double year over year.
That means Microsoft wins whether customers build AI internally on Azure or consume OpenAI-powered tools. Few companies in tech enjoy that kind of optionality.
What Wall Street Is Really Betting On
This isn’t just a stock call. It’s a signal.
Analysts are moving away from narrow AI use cases and toward companies that monetize AI regardless of which model, startup, or application dominates next. Infrastructure, distribution, and ecosystems are where durable profits tend to settle.
That’s why Nvidia and Microsoft keep rising to the top of analyst rankings — even as newer AI names grab headlines.
The Risk Everyone’s Watching
There are real threats. Cloud giants are experimenting with in-house AI chips to reduce dependence on Nvidia. Governments are circling AI infrastructure with regulatory questions. And AI spending could slow if economic conditions tighten.
But analysts broadly agree these risks would erode margins at the edges — not dismantle the core businesses.
Conclusion
Palantir’s run was the AI trade of yesterday. Nvidia and Microsoft are the AI businesses of the next decade.
As the AI boom matures, Wall Street isn’t chasing the loudest story anymore. It’s buying the companies that everything else runs on.