Which Is the Better Investment for 2025?

Wall Street has been fascinated with investing in technology stocks with a particular emphasis on artificial intelligence (AI) stocks this year. In 2025, two leading competitors Palantir Technologies and Amazon have two different stories. As shares of Palantir have gained over 150% so far this year, analysts are largely bearish on the firm, with one seeing the stock plummeting in the future.

On the other hand, the Amazon stock does not experience steep rises but holds a high bullish rating. This article will explore facts, numbers and future expectations in order to unravel this disparity and enable an investor to make a sensible decision.

Strong growth at Palantir

In 2025, Palantir Technologies (NASDAQ: PLTR) recorded remarkable operational data. The company had experienced seven consecutive quarters of revenue growth, which was crowned with 39% revenue growth in Q1 to $884 million and 62% non-GAAP earnings per share of $0.13, diluted. It also increased customer base by 39% and average customer spending by 24% and maintained a healthy net revenue retention rate. Riding the wave in demand of its AI platform, management boosted its full-year revenue outlook to 36% growth.

Palantir reported exceptional second-quarter financial results that beat estimates on the top and bottom lines. Customers increased 43% to 849 and the average existing customer spent 28% more. In turn, revenue climbed 48% to $1 billion, the eighth straight acceleration, and non-GAAP earnings increased 77% to $0.16 per diluted share, which predicts good industry-tailwinds.

Moreover, recent reports show that Palantir has reported a 68% year-over-year growth in the revenues generated in the U.S as the government and corporate worlds have increased usage. Both profit margins and revenues are increasing and this indicates efficacy in operations.

Nonetheless, due to these strong fundamentals, Palantir is challenged by a blaring issue, its own valuation. It has a bizarrely high price-to-sales ratio of 110 times, even by the soaring standards of the stock market since growth became decoupled from profitability, as it is by far the most expensive company in the S&P 500 index, with the second-most expensive, priced at 35 times sales.

This means that just based on high growth, this steep valuation exposes the stock, i.e., even a drop in stock price of 65% will not reduce the valuation levels into normal range. This lack of correlation has contributed to most 29 Wall Street analysts appending a median 12-month price target of 1.11 predicting an approximate 30% negative impact with the current price of 158.

Stable Growth, Fair Value Amazon

Amazon (NASDAQ: AMZN), by comparison, is strongly popular with the analysts in 2025. It is not reporting year-to-date returns in its ability to grow its stock, but over 7% its business and its earnings growth really speak volumes. In Q2 2025, Amazon reported an increase in revenue by 13% or $167.7 billion, as growth in advertising and Amazon Web Services (AWS) cloud business was strong.

Amazon is a market share leader in three powerhouse markets i.e., e-commerce (largest outside China), digital advertising (third-largest worldwide), and cloud infrastructure (largest by revenue public cloud). The growth rate of each of these markets is projected to surpass 10% per year up to 2030.

Amazon is forecasted to produce earnings growth at an 18% annualized rate over the next couple of years to reflect its expanding footprint and cloud business margins. Its present price-to-earnings (P/E) ratio of 33-fold is considered realistic, though, considering Amazon lately exceeding its consensus estimates of earnings averagely by more than 20%.

The Amazon share is a more stable growth story, restricted to myriad and expanding revenue streams and its price is reasonably valued in a decent balance with its earnings potential. Although there is a degree of caution against its modest growth in AWS may underperform the competitive arena, this fact has not diminished the size and cross-segment strengths of Amazon, which have long been beloved by long-term investors.

The Verdict of the Analysts and the significance to the Investors

Moving forward, it is quite clear that Wall Street is strongly leaning toward Amazon as a better investment. The median 12-month price target among the 71 analysts tracking Amazon is also at $252, implying a 15% upside relative to its current price at $219. By comparison, the 29 analysts that cover Palantir have a 30% downside and a recommendation to sell or do not buy more.

Even with the standout advantages of Palantir being a new AI powerhouse that has been moving very fast, the inflated valuation is substantial risk. Investors might have time to wait and hopefully find a much more enticing entry point or reduce massive existing positions to hedge in case of a loss.

Amazon, in its turn, is in a strong position of leading the market in multiple regions, and its values have been maintained by the estimable growth forecasts, placing it favorably in the hands of an investor desiring a long-term stable growth of capital gains.

Future Outlook

With AI and cloud computing turning industries on their head, these two companies stand to gain, though, the implications of investment are diverse. Palantir is a high growth and high innovation (but overpriced) and Amazon is a mature but diversified revenue stream company. In the short term, it is likely that Palantir will be a volatile stock as its valuation dynamics are in question even though it is on a financial roll. With e-commerce recovery, advertisement, and AI-inspired cloud services, Amazon should provide consistent revenue growth.

Investors who want to put money to work in AI and tech stocks could be better off playing an Amazon balanced growth and value tilts in 2025 and keeping an eye out on Palantir to see when its heady valuation is more likely to give investors a better buying price.