The AI-focused Palantir joins a group of less than 50 public American companies worth at least $200 billion, quite the turn of events for the government contractor worth less than $20 billion two years ago.

On the surface, Palantir looks wildly expensive. However, it appears to have a competitive advantage in enabling companies to implement AI. That advantage may not be easily copied. In response, Palantir's stock rallied another 24% on Tuesday,

Palantir executives welcomed the advent of low-cost artificial intelligence. Other software stocks could also see benefits from cheaper AI.

Palantir Technologies recently reported stellar fourth-quarter financial results that propelled its market value to $230 billion. But some Wall Street analysts think Advanced Micro Devices ( AMD -6.27%) and ServiceNow ( NOW 1.