Palantir Technologies Inc (NASDAQ: PLTR) has pulled back in recent days amidst a broader sell-off in artificial intelligence (AI) names, driven by valuation concerns and macroeconomic uncertainty.
White House officials have hinted that October inflation data may never be released, complicating the Federal Reserve’s rate decision and adding pressure to richly valued tech names like PLTR.
Still, the Denver-headquartered firm remains a standout in the AI landscape, being the only “pure-play” public company focused on the application layer of artificial intelligence.
Its platform delivers palpable business impact through agentic AI and intuitive interfaces, enabling clients to achieve high ROI without needing technical expertise.
A recent McKinsey study shows most enterprises struggle to scale AI, but PLTR clients are among the few who succeed.
In fact, the company’s chief executive, Alex Karp, recently dubbed it “downstream to America’s success.” Still, Goldman Sachs analysts believe another AI name offers a better investment heading into 2026.
At the time of writing, Palantir stock is up roughly 130% versus the start of 2025.
Why Arista Networks is a better pick than Palantir shares
Goldman Sachs favors Arista Networks (NYSE: ANET) over PLTR stock due to its foundational role in AI infrastructure.
ANET’s modular cloud networking hardware is designed to scale from 100 to more than 100,000 servers, making it indispensable for artificial intelligence data centers and enterprise campuses.
The company’s R4 platform, launched in late October, is optimized for AI workloads, offering high-performance capacity, faster job completion, and lower power consumption – all while reducing total cost of ownership.
With over 10,000 cloud clients and more than 100 million ports deployed globally, Arista’s reach and reliability are rather unmatched.
In its latest research note, Goldman Sachs highlighted ANET’s ability to “deliver top-end services for client-to-cloud networking,” positioning it as a key enabler of AI adoption.
Unlike Palantir, which operates at the application layer, Arista provides the physical and software backbone that AI systems depend on.
The infrastructure-first approach offers broader market exposure and long-term scalability, making Arista stock a more compelling AI investment.
Valuation and Upside Favour Arista Over PLTR shares
While Palantir’s growth has been explosive, with an over 50% revenue growth expected this year, Goldman Sachs sees its valuation as a limiting factor.
According to the investment firm, PLTR shares are trading at 80x EV/Sales and over 150x EV/FCF for 2026, far above peers with similar growth and margin profiles.
This premium valuation, combined with ecosystem risks like a shift from custom deployments to off-the-shelf AI solutions, tempers its enthusiasm.
Palantir stock, therefore, earns a neutral rating from Goldman Sachs and a price objective of $188, suggesting limited upside from its current level.
In contrast, Arista shares receive a Buy rating and a $170 price target, implying a 30% upside from here. The Street agrees: Arista holds a Strong Buy consensus based on 16 Buys and 3 Holds, while Palantir’s consensus is a Hold.
All in all, with consistent revenue growth – 19 straight quarters of record highs – and a balanced valuation, ANET stock offers a more attractive risk-reward profile heading into 2026
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