Palantir Technologies (PLTR 2.09%) The stock has been on a roll in 2024 as investors showed increasing interest in this software platform specialist thanks to strong demand for the company’s artificial intelligence (AI)-focused offerings, resulting in a significant acceleration in its revenue and profit growth.

As of this writing, the stock is up a staggering 380% this year and is now trading at an extremely high valuation. With a price-to-sales ratio of 75 and an earnings multiple of 412, Palantir is not an ideal candidate for investors looking to buy an artificial intelligence (AI) stock at a reasonable valuation.

Of course, the forward earnings multiple of 217 suggests that the company’s bottom line is likely to improve significantly in the coming year, but that lofty valuation also means that any signs of weakness in Palantir’s growth story could send the stock into a downward spiral. Given the lucrative AI software platform market the company serves, there’s a good chance Palantir can sustain its impressive growth over the long term, but it’s still a risky investment.

Anyone looking for a cheaper company to capitalize on this opportunity may want to consider this C3.ai (AI 0.70%). The stock posted more modest gains of 23% in 2024 and has been in the headlines for all the wrong reasons lately. But it also trades at significantly cheaper valuations than Palantir and taps into a similarly addressable market. Therefore, now would be a good time to ask whether C3.ai can follow in the footsteps of its larger competitor and bring eye-popping profits to investors.

Lots of room for growth in AI software

According to market research firm IDC, the AI ​​software platform market generated revenue of $28 billion in 2023. The company predicts that this market could be worth a whopping $153 billion by 2028, meaning more than one company has room to thrive in this space. Both Palantir and C3.ai are only scratching the surface of a huge opportunity.

Palantir’s revenue for the last four reported quarters was $2.65 billion. C3.ai, on the other hand, generated $325 million. More importantly, both companies have seen their growth rates increase since the beginning of 2023.

PLTR sales data (TTM) from YCharts.

Additionally, both companies reported nearly identical growth rates in recent quarters. While Palantir’s revenue rose 30% year-over-year to $726 million in the third quarter of 2024, C3.ai’s revenue rose 29% year-over-year to $94 in the second quarter of fiscal 2025, which ended Oct. 31 million US dollars.

Both also raised their full-year revenue guidance as demand for their generative AI software solutions increased among both commercial and government customers. It’s worth noting that Palantir originally made a name for itself by providing software platforms and analytics solutions to US government agencies, but has recently been focusing on acquiring more commercial customers in the enterprise AI software space.

A similar story is playing out at C3.ai. The company has entered into “new and expanded agreements with the U.S. Department of Defense, U.S. Air Force, U.S. Navy, U.S. Army, U.S. Marine Corps, Defense Logistics Agency, and Chief Digital Artificial Intelligence Office, among others. “,” said CEO Tom Siebel in the most recent earnings call.

C3.ai now has partnerships with major cloud service providers such as: Microsoft, Amazonand Google to ensure greater reach for the 100+ enterprise AI applications on offer. The Company also offers an enterprise AI application development platform that enables customers to develop their own solutions, apart from industry-specific solutions that help customers integrate generative AI into their operations.

In short, the company appears to be positioning itself to make the most of the enormous opportunities in the AI ​​software market. But will that be enough to achieve Palantir’s success?

There are signs of strong growth for both companies

C3.ai is currently a much smaller company than Palantir. However, revenue growth was nearly in line with Palantir’s most recent quarter, and both companies have experienced growth spurts in recent years.

In addition, both companies expect their sales revenue to increase by 25% for the current financial year. Palantir’s revenue is expected to be $2.79 billion in 2024, while Palantir is expected to generate revenue of $388 million in the current fiscal year. Analysts also expect robust double-digit percentage growth for the next few years.

PLTR sales estimates for next fiscal year data from YCharts.

Even better, analysts have increased their growth expectations for both companies. That’s not surprising given the size of the markets they serve, and there’s a good chance their growth prospects will continue to improve as adoption of generative AI software increases.

Even though C3.ai is expected to remain a smaller company than Palantir over the next few years, its solid growth and end-market opportunities make it an ideal alternative for anyone looking to capitalize on the growth of the AI ​​software market at a reasonable valuation.

Finally, C3.ai’s revenue multiple of 13 is less than a fifth of its larger counterpart, even though its growth rates are nearly the same. For this reason, investors looking for the next Palantir would do well to keep C3.ai on their watchlist or buy it now, as its improving growth profile could lead to strong share price gains.