Forget Palantir Stock at $140 per Share. Buy This Artificial Intelligence (AI) Chip ETF Instead.

Palantir Technologies has experienced significant growth with an 113% average annualized return over the past three years and has continued to show strong financial performance with a 85% year-over-year revenue increase and a 306% growth in net income.
Despite strong earnings and a raised forecast for $7.65-7.66 billion in fiscal year revenue, Palantir’s stock price declined post-report by 7%, primarily due to its high valuation with a P/E ratio of 180.
Palantir’s stock valuation is very high, its price-to-earnings (P/E) ratio is 180, which has decreased from 412 at the start of the year, indicating investors project more modest future growth.
In contrast to Palantir’s high-risk valuation, the VanEck Semiconductor ETF (SMH), which focuses on AI chipmakers, presents a riskier but more diversified option, with lower valuation P/E of 49 and delivered stellar performance with a 66% average annualized return over the past five years and a 76% return year-to-date in 2026.
Despite high returns and its solid historical performance, investors should consider the volatility of SMH and keep allocations to aggressive growth ETFs like SMH on a smaller part of a diversified portfolio.
The Motley Fool Stock Advisor did not include VanEck ETF Trust – VanEck Semiconductor ETF in their top 10 stocks recommendation for investors, suggesting varying perspectives on immediate investment potential, though with a track record showing average returns vastly outperforming the market.