Alphabet Inc. (GOOGL)vs Palantir Technologies Inc. (PLTR)

Quick verdict

Alphabet Inc. (GOOGL) and Palantir Technologies Inc. (PLTR) appeal to different investors. On our six-factor framework, GOOGL scores 3 and PLTR scores 3. GOOGL looks cheaper on the multiples that matter, while PLTR grows faster and PLTR earns higher returns on capital. The two are evenly matched overall, so your priority — value, growth, income or safety — should decide it.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Alphabet Inc. operates in Internet Content & Information (Communication Services), while Palantir Technologies Inc. sits in Software - Infrastructure (Technology). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. GOOGL carries a beta of 1.25 versus 1.56 for PLTR, meaning PLTR has historically been the more volatile of the two.

Valuation

On valuation, GOOGL is the cheaper stock. GOOGL trades on a forward P/E of 12.86 and EV/EBITDA of 12.57, against n/a and 119.86 for PLTR. Price-to-sales is 9.06 vs 54.29, and free-cash-flow yield is 1.5% vs 1.6%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

PLTR is the faster grower. GOOGL has compounded revenue at 15.1% over three years with EPS growth of 34.2%, while PLTR has delivered 56.2% revenue and 228.6% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, PLTR is stronger. GOOGL posts a 33.1% operating margin, 50.8% return on equity and 15.1% return on invested capital. PLTR posts 38.1%, 32.2% and 22.3% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

PLTR has the safer balance sheet. GOOGL carries net-debt/EBITDA of 2.61x with a current ratio of 2.72, versus 0.80x and 6.91 for PLTR. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year GOOGL returned 28.9% against -30.4% for PLTR; on a three-year annualised basis it is -3.6% vs 6.1%. GOOGL yields 0.3% and PLTR yields 0.0%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, GOOGL is the better fit on today's multiples. Growth investors will likely prefer PLTR, which is expanding faster. Income investors should lean toward GOOGL for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour PLTR for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: GOOGL
• Growth: PLTR
• Income: GOOGL
• Quality: PLTR

Frequently asked questions

Is GOOGL or PLTR the better buy right now?

Neither is universally "better." GOOGL scores 3 and PLTR scores 3 on our six-factor framework. GOOGL is cheaper, PLTR grows faster, and PLTR is higher quality — so the right pick depends on your objective.

Which stock is cheaper, GOOGL or PLTR?

GOOGL is the cheaper stock across forward P/E (12.86 vs n/a), EV/EBITDA (12.57 vs 119.86) and price-to-sales (9.06 vs 54.29).

Which has grown faster, GOOGL or PLTR?

PLTR has the stronger growth profile, with three-year revenue CAGR of 15.1% for GOOGL versus 56.2% for PLTR.

Which stock pays a bigger dividend?

GOOGL yields 0.3% and PLTR yields 0.0%, so GOOGL is the stronger income choice.

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