The AI revolution is responsible for one of the strongest three-year rallies in S&P 500 history.
Nvidia and Palantir have become the faces of the rise of AI thanks to their sustainable moats.
However, insiders’ actions are sending mixed signals for the stock market’s leading AI stocks.
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For only the third time in S&P 500the existence of, the benchmark index of Wall Street rose at least 15% for three consecutive years. These big returns for Wall Street from 2023 to 2025 come courtesy of the artificial intelligence (AI) revolution.
Empowering software and systems with the ability to make split-second decisions without the need for human oversight is a technological leap forward that could eventually add trillions to global gross domestic product (GDP). From a hardware and applications standpoint, no two AI stocks are driving the charge quite similarly. Nvidia(NASDAQ: NVDA) and Palantir Technologies(NASDAQ: PLTR).
During Wall Street’s three-year, AI-driven bull market, Nvidia added more than $4.2 trillion in market value, while Palantir shares rose more than 2,500%! They have probably become the faces of the AI movement.
Image source: Getty Images.
But while their respective growth rates suggest a fourth year of big profits could be in the cards, the actions of those who know Nvidia and Palantir best point to a different outcome in the new year.
However, before we make predictions about the future, it’s important to understand how we got to the point where Nvidia and Palantir are, essentially, at or near the center of the AI universe on Wall Street.
The superior performance of both companies can be traced back to their well-defined sustainable moats.
For example, Nvidia’s graphics processing units (GPUs) are the preferred choice as the brains of AI-accelerated data centers – and it’s not even close. By some analyst estimates, Nvidia’s Hopper (H100), Blackwell and Blackwell Ultra chips account for 90% or more of the GPUs currently deployed in enterprise data centers.
No externally developed GPU has come particularly close to matching the computing power of what Nvidia’s GPUs bring to the table. In addition, CEO Jensen Huang has kept his company on an aggressive innovation schedule that will see a new advanced chip introduced during the second half of each year. Progressively faster and more efficient GPUs will make it virtually impossible for other chipmakers to go toe to toe with Nvidia in AI data centers.
Nvidia’s CUDA software platform played a crucial role in its success, too. This set of tools, which developers use to maximize the computing potential of their Nvidia GPUs, keeps customers loyal to the brand.
Palantir Technologies, meanwhile, is an AI applications business that lacks one-to-one replacement at scale.
Palantir’s main operating segment is Gotham, an AI-driven software-as-a-service platform that the US government and its allies rely on for planning and overseeing military missions, as well as for data collection and analysis. Most of Palantir’s government contracts span four or five years, leading to highly predictable operating cash flow and a sustainable (and transparent) double-digit growth rate.
The company’s other main operating segment, Foundry, caters to businesses. Foundry is an AI and machine learning powered platform that helps companies understand their data to streamline their operations. As a newer platform, Foundry has the potential to deliver huge sales growth over the decade.
Wall Street and investors have shown a willingness to pay a premium for public companies with sustainable moats.
Image source: Getty Images.
However, things do not always go as expected by stock market investors. The actions of Nvidia and Palantir insiders in 2025 certainly raise some potential red flags for the new year.
An “insider” is a high-ranking company executive, member of the board of directors, or beneficial shareholder who may have non-public information. For reasons of transparency and to follow all securities laws, insiders are required to file Form 4 with the Securities and Exchange Commission within two business days of buying or selling their company’s stock.
Based on the 2025 Form 4 filing, insiders at Nvidia and Palantir were decisive net sellers of their respective shares:
Nvidia: $2,164,822,949 in net sales activity
Palantir: $1,146,687,533 in net sales activity
Collectively, more than $3.3 billion of Wall Street’s hot AI stocks were sold by insiders last year.
The asterisk that should be placed next to the aforementioned figure is that not all insider selling is necessarily bad news for investors. Since most executives and board members are compensated in the form of shares or stock options, they often sell a portion of their shares or exercise their options and subsequently sell the shares to cover their federal and/or state income tax liability. Tax-based selling is not something that Wall Street or investors should worry too much about.
At the same time, insider buying was almost non-existent for both companies. The last time an Nvidia executive or board member bought shares was more than five years ago, in December 2020. Meanwhile, only one Palantir executive/board member bought shares last year.
Although there are several reasons to sell a stock, not all of which are bad, the only reason an insider buys shares is if they believe the stock will go up. The persistent lack of insider buy-in we’ve observed with Nvidia and Palantir speaks volumes.
As we move forward to 2026, keep in mind that no next technology trend, for more than three decades, has avoided an early innings bubble burst event. While AI has been Wall Street’s hottest trend for three years (and counting), AI is nowhere close to being a mature technology.
Furthermore, history has shown that price-to-sales (P/S) ratios above 30 for companies announcing the payment of a game-changing innovation are not sustainable over long periods. Nvidia’s P/S ratio briefly topped 30 in early November, while Palantir’s P/S ratio is currently tipping the scales at 110!
The lack of insider buying, combined with billions of dollars in annual insider sales, seems to indicate that neither Nvidia nor Palantir shares are attractive.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Artificial Intelligence (AI) stocks Nvidia and Palantir issue $3.3 billion Wall Street warning in 2026 was originally published by The Motley Fool
