The AI supercycle is entering a new stage driven by technologies such as physical AI and agentic AI. Nvidia (NVDA), with its early layout in physical AI and vast market potential, is poised to sustain strong growth. Palantir (PLTR), on the other hand, is leveraging the rapid growth of agentic AI and strong contract momentum to become a key beneficiary in this niche. These two stocks represent two major directions for the next phase of AI and warrant long-term attention.
Physical AI refers to the integration of artificial intelligence into physical entities such as robots, vehicles, and drones. By embedding AI into these hardware systems, they can navigate real-world environments and make autonomous decisions. Nvidia has already established a presence in this market. During its February earnings call, management noted that physical AI contributed over $6 billion in revenue in the previous fiscal year. The semiconductor giant believes that, in the long run, physical AI solutions could become a primary revenue driver, adding “hundreds of billions of dollars” to its top line.
Nvidia is collaborating with multiple companies to develop robotaxi solutions, including Alphabet’s Waymo, Uber, and Tesla. Additionally, it is working with Caterpillar, LG Electronics, and Boston Dynamics, among others, to build autonomous robots for industrial use. Nvidia’s early positioning in this market is expected to yield substantial long-term returns, given that the physical AI market is projected to reach an astonishing $32.5 trillion by 2040. Therefore, Nvidia may currently have only scratched the surface of this massive opportunity, which will help sustain its robust growth for years to come. The company generated nearly $216 billion in revenue last year, and the potential of the physical AI market suggests a significant long-term revenue surge. Investors may consider buying and holding Nvidia stock for the long term, as its impressive growth momentum is far from over.
Agentic AI is expected to become another major segment of the AI landscape in the coming years. Agentic AI systems can make autonomous decisions by analyzing problems and executing complex tasks. Consulting giant Boston Consulting Group estimates that agentic AI solutions can boost enterprise productivity by 30% to 40%. By 2030, the agentic AI market is projected to grow at an annual rate of 46%, generating nearly $53 billion in revenue by the end of that year.
Palantir Technologies helps enterprises and governments build agents using its Artificial Intelligence Platform (AIP), allowing investors to capitalize on this rapidly growing opportunity. Last year, the company was named the top provider of agentic AI solutions by analytics firm Dresner Advisory Services. Palantir is attracting new customers at a healthy pace and securing more business from existing clients. This has enabled it to build a substantial revenue backlog, as new contracts are being signed much faster than revenue is being recognized. In the fourth quarter of 2025, Palantir signed contracts worth $4.3 billion, representing a 138% year-over-year increase, far exceeding its 70% quarterly revenue growth (with quarterly revenue of $1.4 billion). As the agentic AI market expands and more enterprises flock to its AIP agent solutions, Palantir’s revenue pipeline and growth should accelerate.
Over the long term, Palantir stock stands to be a major beneficiary of the sustained growth in the agentic AI market. Importantly, this segment is expected to unlock significant growth opportunities for the company, helping it substantially increase revenue and delivering greater upside for investors.
