Palantir Technologies Reaches $100: Is This Sizzling AI Stock Still Worth Investing in? Three Experts Offer Their Perspectives.
It's hard to fathom that Palantir Technologies (PLTR) was worth a mere $6 per share in early 2023, with its shares now surpassing the $100 mark following impressive Q4 earnings that underscored its continued momentum in artificial intelligence (AI). The meteoric rise in share price has raised eyebrows, and rightfully so, prompting questions about Palantir's sustainability.
While followers of the company would argue its accelerating revenue growth and massive addressable market, it's important to separate the business from the stock. Palantir's AI software has a wide range of applications, from military uses to supply chain management. But when the stock prices soar, investors should ponder whether they've outpaced the company's growth potential.
PLTR
Three experts assessed the disconnect between Palantir's business and its stock, to determine whether it's wise to continue buying shares at these high levels. First up, Jake Lerch.
Jake Lerch:
Jake Lerch's Take:
price-to-sales ratio of 96 times puts the stock far out of reach for any value investor -- and even for most value-conscious growth investors.
Alex Karp, Palantir's CEO, calls the company a "software juggernaut." Given the growing signs that Palantir isn't just a fleeting trend, I'm inclined to believe him. Could Palantir truly become an era-defining company, like Microsoft, Apple, Meta Platforms, and Netflix over the past 20 years? It's worth considering, and some argue Palantir is showing signs of forging its own path.
Will Healy
In Palantir's recent quarter, U.S. revenue alone grew by 52% year over year to $558 million, with commercial U.S. revenue skyrocketing by 64%. American companies are literally tossing cash at Palantir, seeking the AI-powered platform's potential to improve margins, enhance customer satisfaction, and fuel growth.
P/E ratio of over 530 since it has only earned a profit for a relatively short amount of time.
But what about the valuation? Traditional metrics suggest the stock is terribly overpriced, with a trailing P/S ratio of 96 times. However, ballsy stocks with lofty valuations like Amazon in the early 2000s have defied conventional wisdom in the past.
forward P/E ratio, which is now above 200, indicates the stock price is years ahead of its growth despite a 116% rise in yearly net income over the previous year.
Nevertheless, the rhythm of the stock market can often get ahead of itself. Investors might want to wait for a pullback before jumping into the Palantir bandwagon.
price-to-book value ratio of 51 is arguably the most blatant sign of overvaluation. Although the
Will Healy's Take:
Justin Pope:
Clearly, Palantir's earnings report in Q4 was nothing short of stunning, with revenue growth and profits on the rise. However, the stock price seems to have surpassed these gains by a considerable margin.
uniquely flexible software intersects with an AI opportunity that some estimate will create trillions of dollars in economic value over the coming years.
The price-to-earnings ratio of over 530, once a red flag for skeptics, has been overlooked by investors excited about Palantir's potential. The forward P/E ratio, now above 200, points to a stock price that is years ahead of its growth. The price-to-book value ratio of 51 is even more indicative of overvaluation, having reached Nvidia-like levels that could imply limited upside.
market cap is roughly $250 billion. The company generated $2.87 billion in revenue in 2024. To give some perspective to that, Palantir is now a larger company than some of the world's most prominent businesses, including
However, Palantir's market niche in AI software is booming – but its stock performance has become decoupled from its fundamentals. Given the stock's volatility, investors might do well to avoid this stock for the time being.
Justin Pope's Take:
PLTR Revenue (TTM) data by
Palantir's uniquely flexible software intersects with an AI opportunity some estimate could create trillions of dollars in economic value over the next year. Indeed, Palantir is already generating impressive revenue growth, but some worry the valuation may have reached a point of no return.
YCharts
It's worth noting that Palantir's market cap of $250 billion dwarfs its $2.87 billion revenue for 2024. While that might spark concerns for some, it's a testament to the stock's growth potential.
As investors weigh the risks and rewards, they might want to consider their risk tolerance, choose wisely when entering the market, and maintain a diversified portfolio.
Enrichment data suggests potential challenges and considerations for investing in Palantir, including valuation concerns, CEO and other insider selling, potential government budget cuts, macroeconomic factors, and ownership dynamics. Investors should carefully analyze these and other factors before deciding whether to venture into the Palantir market.
- With Palantir's shares now surpassing the $100 mark, some investors might be considering investing more money in the finance sector, specifically in Palantir Technologies (PLTR).
- The meteoric rise in Palantir's stock price has led to a debate about whether the company's growth potential can sustain the high valuation. To analyze this, experts often use metrics like the price-to-sales ratio and price-to-book value ratio.
- In 2024, Palantir generated a revenue of $2.87 billion, which is a significant increase from its early 2023 valuation of $6 per share. However, its market cap is approximately $250 billion, which some investors view as a potential sign of overvaluation.
- When considering investing in Palantir, it's crucial to keep in mind various factors such as valuation concerns, CEO and other insider selling, potential government budget cuts, macroeconomic factors, and ownership dynamics. Analyzing these factors can help investors make an informed decision about whether or not to invest in Palantir Technologies' stock.