At a valuation of $43 billion, Databricks is the seventh most valuable startup in the world. The company boasts an impressive investor roster that includes some of the world’s largest companies, including his renowned venture capital (VC) firms, Andreessen Horowitz and Tiger Global.business including capital one and Nvidia.
Given Nvidia’s dominant position in the hardware business, investors may wonder why it would invest in data analytics provider Databricks. Big data means huge opportunities in artificial intelligence (AI), and Nvidia’s relationship with Databricks could pose challenges for companies. Palantir Technologies (PLTR -2.28%)?
What is Databricks?
Databricks is the world’s most valuable software startup and the second most valuable privately held AI company after OpenAI, the developer of ChatGPT.
Databricks develops a data intelligence platform built on a lakehouse architecture that combines elements of data lakes and data warehousing. Essentially, the platform optimizes application performance and provides business intelligence, real-time analytics, data warehousing, and AI.
Palantir develops and sells enterprise software solutions to both the public and private sectors. Although the specifics of each Palantir software suite are different, the common thread that unites them is that the company specializes in accumulating large data sets from disparate systems.
More importantly, Palantir helps decision makers visualize this data in maps called ontologies. From here, business leaders can search data libraries and run advanced queries to make more informed and efficient decisions.
Through the Mosaic AI platform, Databricks provides generative AI applications that help power predictive modeling and large-scale language models (LLMs). Databricks may not be a direct threat to Palantir, but I view the company as a direct competitor.
Image source: Getty Images.
Why is Nvidia interested in Databricks?
Nvidia is currently at the forefront of the AI story. However, unlike cloud computing companies such as: microsoft, alphabetand AmazonNvidia is more of a hardware player, as it is by far the leader in semiconductors.
Investors may not realize it, but Nvidia has been quietly making inroads into enterprise software.The company is an investor in a voice recognition company Soundhound AI, as well as robot startup Figure AI. Both of these areas present unique use cases for AI software applications.
AI-controlled speech recognition is an area that is receiving a lot of attention from the likes of Microsoft, Alphabet, and Amazon. apple. Considering that the target market for this technology could reach $50 billion by the end of the decade, according to industry research, it’s no surprise that Nvidia would take the leap.
Another move Nvidia is making with regards to enterprise software is snowflake. Nvidia’s NeMo software is integrated with Snowflake’s cloud-based data warehousing capabilities.
With Databricks and Snowflake gaining support from one of the most important AI leaders, some investors may be wondering if Palantir is in trouble.
Should Palantir investors be concerned?
Nvidia’s relationship with Databricks and Snowflake is interesting, but I don’t see them as a threat to Palantir. Broadly speaking, increased competition can be seen as a positive. This is because innovation is often a byproduct of an increasingly competitive environment.
When it comes to Palantir, the company is much more than just a data integration and storage business. Palantir’s real competitive advantage is that it has spent nearly 20 years developing and perfecting its software. Artificial intelligence (AI) is at the heart of the company’s intellectual property and is rooted in Palantir’s DNA.
Notably, Snowflake CEO’s recent departure comes at a time when AI is at the forefront. I think this shows a lack of clear AI vision. A partnership with Nvidia could be promising, but it’s probably too early to tell for sure.
I think the relationship with Nvidia becomes clearer as it relates to Databricks. Databricks is an AI company and on some level competes with Palantir. However, given the evolving AI landscape, I see multiple winners over the long term.
Despite Databricks support from Nvidia, Palantir proved to be a winner on its own. Given the company’s revenue growth, sustained profits, accelerated customer acquisition, and concrete AI roadmap, Palantir is one of the best AI opportunities available to investors today, regardless of its competitors. That’s what I think.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Adam Spatacco has held positions at Alphabet, Amazon, Apple, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, Palantir Technologies, and Snowflake. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
