Saudi Arabia buys Nvidia chips, but it’s Palantir (PLTR) that gains the power
Palantir (PLTR) made headlines this week after signing a strategic defense deal with Saudi Arabia, but the agreement carries broader significance beneath the surface, especially given the kingdom’s aggressive purchases of Nvidia chips.
The partnership gives Saudi Arabia access to Palantir’s software suite, including its AI, data integration, and decision support platforms, for use across defense and national infrastructure projects.
At the same time, Saudi Arabia has been buying Nvidia GPUs at a rapid pace. These chips provide the computing power needed to run advanced AI models and other high-performance systems.
However, hardware alone doesn’t create intelligence or solve operational problems. Without software to organize data, build workflows, and deploy AI into real-world settings, the chips won’t translate into meaningful military or economic value.
That’s where Palantir comes in. “Palantir looks like the ontology layer that will actually turn that silicon into value,” said market analyst Shay Boloor.
In practical terms, an ontology layer is a structured framework that tells AI systems how an organization works — defining its data, relationships, processes, and rules. Palantir’s Foundry and AIP platforms create that map, allowing GPUs to be utilized efficiently rather than sitting idle as unused computing capacity.
In effect, Saudi Arabia is not just buying cutting-edge chips — it’s buying the software infrastructure required to make those chips useful.
Palantir stock shakeout
Palantir has been caught in the same downdraft hitting the broader tech sector, as markets cool following a prolonged post–Liberation Day rally.
The stock is down more than 11% over the past month and 22% from its peak in early November. Even so, it remains one of Wall Street’s standout performers this year, up 113% year-to-date.
Beyond the marketwide pullback, investors are growing increasingly uneasy about stretched valuations — concerns that extend well beyond Palantir. That anxiety has fueled a rise in short interest, which is being amplified by news that “Big Short” investor Michael Burry is betting against the stock.
Palantir CEO Alex Karp pushed back in an interview with CNBC, calling the shorting activity “market manipulation” and insisting that the company has delivered “the best results everyone, anyone’s ever seen.”
Nevertheless, investor anxiety isn’t unfounded. Palantir trades at a forward price-to-earnings ratio of about 254, compared with roughly 35 for Nvidia, which is the world’s most valuable company.
For this reason, RBC analysts say they see better risk-reward elsewhere in the AI software sector: “Overall, Palantir continues to execute around AIP commercialization, but we believe growth remains narrowly supported by U.S. enterprise demand and front-loaded Al transformation spend.”