Two companies that can’t seem to stay out of the same conversation are Snowflake and Palantir Technologies (NYSE: PLTR). Each of these tech firms operates in the space of big data analytics. Following years operating as private companies bankrolled by some of Silicon Valley’s most prominent investors, Palantir and Snowflake debuted on the public markets within days of each other in late 2020.
For years, I’ve found the connection between Palantir and Snowflake perplexing. The main reason is that these companies don’t really compete with one another.
Snowflake is a data warehousing platform — a budding application within cloud computing. On the other hand, Palantir specializes in data aggregation across siloed software systems.
While Palantir competes head-to-head with many big tech businesses, the three companies explored here are arguably its fiercest competition at the moment. Let’s explore these companies and assess how each is giving Palantir a run for its money in the contested landscape of artificial intelligence (AI).
1. Microsoft
Microsoft really kicked off the AI arms race following its multibillion-dollar investment in ChatGPT developer OpenAI. Since partnering with the AI start-up in January 2023, Microsoft has swiftly integrated ChatGPT across its ecosystem. At the forefront of this integration is Microsoft’s leading cloud platform, Azure.
One of the company’s AI-powered software tools is called Fabric. The intention behind Microsoft Fabric is to unify data from disparate sources. By doing so, businesses can accelerate complex tasks in real time to make data-driven decisions. Global businesses, including Ferguson, T-Mobile, and Accenture, all use Microsoft Fabric for use cases including querying large data sets and logistics management.
During the company’s most recent earnings calls, management told investors that data stored in Fabric increased 46% quarter over quarter. While it’s hard to decipher what this translates to in terms of revenue, the general theme is that demand for Fabric is high — and with data becoming increasingly more important at the enterprise level, I suspect this is early innings for the product’s growth.
2. Databricks
One of the hottest start-ups on the planet is Databricks. In September, the company raised $500 million of funding at a cool $43 billion valuation. The round was led by T. Rowe Price Associates, famed venture capital (VC) firm Andreessen Horowitz, Baillie Gifford, Tiger Global, and Nvidia.
Prior to the funding, Databricks spent $1.3 billion in its acquisition of MosaicML — a generative AI platform developing large language models (LLMs).
Similar to Snowflake, Databricks also contains data warehousing functionality. But where the company begins to encroach on Palantir’s territory is when it comes to AI. Databricks focuses on machine learning applications as it pertains to real-time data analytics.
On the other hand, Palantir specializes more in data integration and visualizing these queries in something called an ontology — or a map which links your data together.
Just like Microsoft Fabric, Databricks has made impressive inroads with major companies across a variety of industries. Some of the company’s customers include Hershey, Rivian, and AT&T. These customers have deployed Databricks for a variety of solutions including analyzing consumer behaviors, threat detection, and honing capacity operations.
But as much of a threat as Databricks may present to Palantir, if you’re looking to invest in the company today, you’re out of luck. Databricks isn’t publicly traded, so don’t expect it to show up as a possible investment in your brokerage account right now. Regardless, tracking the progress of this company should continue to help inform investment decisions about Palantir stock moving forward.
3. Amazon
The last competitor on my list is Amazon. While e-commerce is what Amazon is best known for, the company’s cloud computing operation should not be overlooked. Amazon Web Services (AWS) is a major force in cloud operations, often competing with Microsoft, Alphabet, and Oracle. What makes AWS so unique is the sheer number of AI-powered applications develops can access.
I think one of the most underrated products in AWS is Neptune. Amazon Neptune is a graph database — essentially a tool that is layered on top of databases to help connect and query large volumes of data. Like Palantir, Neptune has complementing features including analytics tools that can help spot trends and derive insights.
According to IT research firm Gartner, the most popular alternative to Neptune is a start-up called Neo4j. Among the three companies examined in this article, Amazon is probably the most tangential competitor to Palantir, as opposed to a direct threat.
With that said, Amazon followed a similar path to Microsoft last year. Specifically, the company invested $4 billion into an OpenAI competitor called Anthropic. While there are a host of conditions attached to the deal, the underlying rationale behind the partnership is to bolster AWS.
It is still early days for Anthropic and its relationship with Amazon. But as data becomes an increasingly important asset for businesses of all sizes, software developers will continue to compete for customers expressing similar pain paints: connecting data from various systems in a centralized portal to help make decisions in the most efficient way. For this reason, I could easily see Amazon bolstering the Neptune platform beyond graph database management and competing as a more full-spectrum data analytics solution rooted in AI.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Accenture Plc, Alphabet, Amazon, Microsoft, Nvidia, Oracle, Palantir Technologies, and Snowflake. The Motley Fool recommends Gartner, Hershey, and T-Mobile US and recommends the following options: long January 2025 $290 calls on Accenture Plc, long January 2026 $395 calls on Microsoft, short January 2025 $310 calls on Accenture Plc, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Snowflake Isn’t Palantir’s Biggest Challenge in Artificial Intelligence (AI). Here Are 3 Other Companies to Keep an Eye On. was originally published by The Motley Fool
Source: finance.yahoo.com