With a valuation of $43 billion, Databricks is the seventh most valuable startup in the world. It boasts an impressive roster of investors, including renowned venture capital (VC) firms Andreessen Horowitz and Tiger Global, as well as some of the world’s largest companies. Businesses, incl Capital One And Nvidia.
Given Nvidia’s commanding position in the hardware business, investors may wonder why it invested in data analytics provider Databricks. With big data representing a huge opportunity in artificial intelligence (AI), could Nvidia’s relationship with Databricks be in trouble? Palantir Technologies (PLTR -2.28%)?
What is Databricks?
Databricks is the most valuable software startup globally, and the second most valuable privately held AI company — sitting behind OpenAI, developer of ChatGPT.
Databricks develops a data intelligence platform built on a Lakehouse architecture that combines elements of data lakes and data warehouses. Essentially, the platform optimizes the performance of applications to deliver business intelligence and real-time analytics, data warehousing, and AI.
Palantir develops enterprise software solutions that it sells to both the public and private sectors. While the specifics of each Palantir software suite vary, the common thread that connects them is that the company specializes in collecting large sets of data from disparate systems.
More importantly, Palantir helps decision makers visualize this data in a map called an ontology. From here, business leaders can search through data libraries and run sophisticated queries to help make more informed, effective decisions.
Databricks offers generative AI applications that can support predictive modeling and large language models (LLMs) through its Mosaic AI platform. While Databricks may not be a direct threat to Palantir, I see the company as a significant competitor.
Image source: Getty Images.
Why is Nvidia interested in Databricks?
Nvidia is currently at the forefront of the AI narrative. However, as opposed to cloud computing companies Microsoft, the alphabetAnd AmazonNvidia is more of a player in the hardware arena, given its commanding lead in the semiconductor space.
What investors may not realize is that Nvidia is quietly getting into enterprise software. The company is an investor in a voice recognition company. Sound Hound AI, as well as robotics startup Figure AI. Both of these areas present unique use cases for AI software applications.
AI-controlled speech recognition is an area that has received a lot of attention from the likes of Microsoft, Alphabet, Amazon, and even the likes. apple. Considering that industry research suggests the addressable market for this technology could reach $50 billion by the end of the decade, it’s not surprising to see Nvidia jump.
Another move Nvidia is making in relation to enterprise software is its partnerships Snowflake. Nvidia’s NeMo software is being integrated with Snowflake’s cloud-based data warehouse capabilities.
With Databricks and Snowflake backed by one of the most important leaders in AI, some investors may be wondering if Palantir is in trouble.
Should Palantir Investors Be Concerned?
While Nvidia’s relationships with Databricks and Snowflake are interesting, I don’t see them as a threat to Palantir. Broadly speaking, increased competition can be seen as a positive. The reason is that innovation is often a byproduct of an increasingly competitive landscape.
When it comes to Palantir, the company is more than just a data integration or storage play. Palantir’s real competitive advantage is that it has spent nearly two decades developing and perfecting its software. Artificial intelligence (AI) is at the core of the company’s intellectual property and is rooted in Palantir’s DNA.
Notably, the recent departure of Snowflake’s CEO came at a time when AI was top of mind. I think this signals a lack of a clear AI vision, and while a partnership with Nvidia could be promising, it’s too early to know for sure.
As it relates to Databricks, I think the connection with Nvidia is more obvious. Databricks is an AI company, and on some levels, it competes with Palantir. However, given the evolving AI landscape, I see multiple winners emerging in the long run.
Despite Nvidia’s backing of Databricks, Palantir has proven it can win on its own. Given the company’s revenue growth, consistent profitability, and rapid customer acquisition, combined with a solid AI roadmap, I see Palantir as one of the best AI opportunities available to investors — Regardless of its comparison.
John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Adam Spatico has positions in 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: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.