Why Palantir Stock Is a ‘Perfect' Buy for 2025
Palantir Technologies (PLTR) is a leading software company providing data analysis and decision-making solutions that leverage artificial intelligence (AI). Its products are Palantir Foundry, Palantir Gotham, Palantir Apollo, and Artificial Intelligence Platform (AIP), targeting both governments and commercial clients.
With a market capitalization of $182.7 billion, Palantir shot to fame alongside the AI surge, gaining a massive 950% since 2023 and 360% over the past 52 weeks.
Despite its success in recent years the stock appears to be struggling at the moment. Shares are up just 6.8% in the year to date and are trading almost 6% below their 52-week high of $84.80 set last week on Jan. 24.
Palantir Is the 'Perfect' Stock
Investor's Business Daily has published a list of 28 so-called 'perfect' stocks. The list features artificial intelligence heavyweights like Nvidia (NVDA), Arista Networks (ANET), Meta Platforms (META), and more. In addition to AI stocks, it also has Netflix (NFLX), Duolingo (DUOL), Olo (OLO), and Marex (MRX).
A total of 7 conditions were set for inclusion on the list. Companies had to have a current share price of $12 or higher and a 50-day average trading volume of more than 400,000 shares. Additionally, they had to score above certain thresholds in categories like earnings per share and relative strength.
Palantir Beats Estimates
Palantir released its third-quarter results last year on Nov. 4. Its profit of $144 million translated to $0.06 per share, and its adjusted earnings per share came in at $0.10. This beat the analyst estimate of $0.09 per share. The company saw revenue rise 30% year-over-year to $725.5 million, beating the analyst estimate of $703.7 million.
The AI company's EBITDA was $283.6 million, against analysts' $244.9 million estimate. Its EBITDA margin increased to 39.1% from 30.8% reported in the same quarter last year. GAAP gross margin remained unchanged at 79.8%. Its cash and cash equivalents balance dipped to $768 million from the $831 million reported at the end of 2023, but its free cash flow margin shot up to 60%.
Management also hiked their outlook for 2024 with revenue now expected between $2.805 billion to $2.809 billion with adjusted income from operations to be between $1.054 billion and $1.058 billion. Free cash flow guidance is hiked to more than $1 billion.
For the ongoing Q4, Palantir anticipates revenue in the range of $767 million to $771 million while adjusted income from operations is anticipated between $298 million and $302 million.
Palantir is set to release its fourth-quarter results after the market closes on Feb. 3, 2025.
Analysts' Take on PLTR Stock
Palantir's surge in the recent past has left analysts chasing after the stock. The stock has a consensus 'Hold' rating with a mean price of $47.29, signifying downside potential of 40%. Shares are trading far above the average price target, although the Street-high price target of $90 represents 12.5% upside potential.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
16 minutes ago
- Globe and Mail
Could Buying Palantir Today Set You Up for Life?
Palantir Technologies (NASDAQ: PLTR) has been around for more than 20 years and in its earlier days was most known for software contracts with government clients. But in recent times, commercial customers have offered this player an exciting new revenue stream, and today, with both government and commercial growth soaring, the future looks bright. Investors have recognized this, and they've been piling into Palantir shares for quite some time. Last year, the stock surged 340%, posting the best performance in the S&P 500. In fact, Palantir's share price has climbed so far and so fast that it's found itself at an eye-popping valuation. Still, earnings have continued to march higher and haven't shown any signs of slowing. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Considering this, could buying Palantir today, even at the current valuation, set you up for life? Let's find out. One of the superstars of the AI boom So, first, a quick summary of Palantir's business. The company, through its software platforms, helps customers aggregate often the most disparate of data to make better use of it. Palantir has integrated artificial intelligence (AI) into this process and two years ago launched its Artificial Intelligence Platform (AIP). This has made the company one of the superstars of the AI boom as both governments and commercial customers raced to get in on this often game-changing tool. AIP can be useful in everything from battlefield operations, immediately identifying risks and implementing key plans, to business needs -- for example, customer United Airlines is using AIP for predictive maintenance, helping the airline avoid delays and millions of dollars in costs. How did Palantir reach so many customers so quickly with AIP? The company launched AIP bootcamps, sessions that allow potential users to go from zero to a use case within hours -- so they can see exactly how AIP could benefit their businesses. All of this has translated into explosive revenue growth, particularly as commercial customers discover that Palantir is no longer a business that primarily serves governments -- instead, its technology has broad applications that also are valuable in the commercial world. In the most recent quarter, U.S. commercial revenue advanced more than 70% to $255 million, and the U.S. commercial business delivered its most valuable quarter, booking total contract value of $810 million. That's up 183% from the year-earlier period. Growth in government and commercial revenue As I mentioned, this is as government revenue continues to climb in the double digits quarter after quarter, so Palantir has conserved the growth of its main revenue stream -- the government business -- and added to it with a newer and high-potential revenue stream -- I say "high potential" because companies across industries are aiming to apply AI to their businesses, and Palantir's AIP makes it easy for them to do this. Importantly, Palantir isn't only focused on revenue gains, but the company also has struck a fantastic balance between growth and profitability -- as seen in its Rule of 40 score. Scores of 40% or higher indicate a software player has balanced these two priorities well, so Palantir's delivery of a score of 83% shows the company is hitting it out of the park. Only about a third of software companies meet this rule, according to McKinsey research, and this further highlights Palantir's accomplishment. All of this is very positive, but now let's look at the one point that's been a thorn in the side of Palantir and its investors: and that's the stock's valuation. Today, it trades for an eye-popping 219 times forward earnings estimates, making some investors question whether they should buy the stock or even stay invested if they've already bought it. At such a valuation, the risk is any disappointment could hurt stock performance. Two important questions So, considering all of this, could this unstoppable (at least so far) stock set you up for life? There actually are two questions here, and the first is: Is Palantir a buy? If you're a value investor, you're sure to find a stock better suited to your strategy elsewhere. But if you're a growth investor and aim to hold on for at least five years, even at today's high valuation it's worth picking up a few Palantir shares. The forward price-to-earnings ratio we looked at, above, considers potential earnings next year -- but not over the long term. Palantir is well positioned to gain as the AI boom continues over the next several years, so even if the stock dips at certain points here and there, you still may benefit greatly from an investment today. As for setting you up for life, this growth stock could help -- but it's never a good idea to depend on one stock on its own to do the whole job. It's much too risky to put all of your eggs in one basket. Instead, supercharge your wealth-building power by investing in several quality stocks and holding on for the long haul. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Globe and Mail
15 hours ago
- Globe and Mail
Better Buy: Palantir Stock vs. UnitedHealth Group Stock
Two stocks that have been at the center of financial news stories throughout the year are data mining specialist Palantir Technologies (NASDAQ: PLTR) and health insurance giant UnitedHealth Group (NYSE: UNH). The reasons these two companies are fetching so much attention, however, couldn't be more opposite. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Palantir has emerged as a darling of the artificial intelligence (AI) revolution. As of this writing (June 5), shares of the stock have gained nearly 60% on the year -- making it one of the top performers in the S&P 500 and Nasdaq-100 indexes. By contrast, UnitedHealth Group stock is the worst-performing name in the Dow Jones Industrial Average -- with shares plummeting by more than 40%. Is now the time to hop on the Palantir train, or should investors take an inventory check on UnitedHealth and choose to buy the dip? Palantir is on a run for the ages It's been just over two years since Palantir released its Artificial Intelligence Platform (AIP), a software suite that's proven to be a transformative game changer in the company's pursuit of competing with the largest players in the tech landscape. PLTR Revenue (Quarterly) data by YCharts Since releasing AIP, Palantir has unlocked a new wave of revenue acceleration -- thanks in large part to the company's impressive penetration of the private sector. For most of its history, Palantir relied heavily on government contracts from the Department of Defense (DOD). While deals with the U.S. Military and its allies are still an important cornerstone of Palantir's business, AIP has helped the company break ground in a host of other use cases -- financial fraud, supply chain and logistics, aviation, and much more. What might be most impressive about Palantir's transformation over the last two years is how rapidly the company transitioned from a cash-burning operation to one that generates consistent profitability. Not only is Palantir acquiring new business, but it's also monetizing these customers in a profitable way. That's a lucrative combination, indeed. The one idea that's paramount for smart investors to understand is that while Palantir's business is soaring, so is the company's share price. As of this writing, Palantir trades at a price-to-sales (P/S) ratio of 97. Not only is that magnitudes higher than any of its peers in the software realm, but it is historically high compared to what investors witnessed during the dot-com bubble in the late 1990s. I don't think I'm the only one who has noticed the pronounced valuation expansion in Palantir, either. Consider that Cathie Wood's Ark Invest portfolio has been trimming Palantir stock as of late, and billionaire money manager Stanley Druckenmiller completely dumped his firm's stake in the AI stock during the first quarter. UnitedHealth Group can't seem to get out of its own way UnitedHealth Group's coverage couldn't be any more different than Palantir's. While investors continue to cheer on Palantir's dominance, it seems that only negativity surrounds UnitedHealth at the moment. At the core of the health insurer's problems are some operational hiccups. Mismanagement in forecasting utilization rates in the company's Medicare Advantage business, as well as some unforeseen challenges in the pharmacy benefits management (PBM) segment, caused management to reduce financial guidance for 2025. If this weren't enough to get investors worked up, UnitedHealth also replaced its CEO as the company seeks to right the ship and turn things around by next year. UnitedHealth's downward revision and executive changes were met with a stock sell-off for the ages. Don't believe me? As of this writing, shares of UnitedHealth trade at $296 -- hovering near a five-year low. Which stock is the better buy? Despite its near-term headwinds, UnitedHealth stock looks awfully tempting at a forward price-to-earnings (P/E) multiple of just 13. When you consider that insiders have been buying the stock in the aftermath of this epic sell-off, I'm cautiously optimistic that all of the bad news surrounding UnitedHealth is priced in. UNH PE Ratio (Forward) data by YCharts On the other side of the equation, I think it's becoming increasingly difficult to argue that max upside isn't already priced into Palantir. Sure, I'm bullish on the company's future, but buying the stock near an all-time high doesn't seem like a prudent idea right now. Overall, I'd choose to buy the dip in UnitedHealth as opposed to chasing the momentum fueling Palantir stock at the moment. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to173%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
Globe and Mail
21 hours ago
- Globe and Mail
Is Palantir Still a Buy After Its Run-Up? 3 Analysts From The Motley Fool Weigh In.
One of the fastest-growing stocks in artificial intelligence (AI) over the last year is Palantir Technologies (NASDAQ: PLTR). Its Artificial Intelligence Platform (AIP) brought eye-popping productivity gains to its customers. Investors took notice, as the stock is up by 420% over the last year. Unfortunately for investors who have recently taken an interest, its forward P/E ratio is 205, and it sells for 96 times sales. Knowing that, three analysts from The Motley Fool have weighed in to determine whether its stock is still worth buying at these levels. Is Palantir a repeat lesson from the dot-com era? Justin Pope: Separating noise from signal is arguably the most challenging aspect of investing. For Palantir, the noise is a red-hot stock price. Shares of Palantir have risen a mind-melting 1,770% since 2023. In other words, buying the stock up to this point has looked like a genius move. Anyone seeing this, especially on social media, where people aren't always humble, might feel tempted to jump into the stock. But here is the signal. The stock is rising faster than Palantir's underlying business has grown. Don't get me wrong, I think Palantir is an excellent AI stock, and the company is executing at a high level, particularly since launching AIP two years ago. It can make a stock appear invincible when prices only go up. However, investors have seen this movie before. Cisco Systems ran to wildly excessive valuations during the infamous dot-com bubble in the late 1990s. It lost most of its value when the bubble burst, and still hasn't revisited its all-time high, a whopping 25 years later. That doesn't mean that Palantir will suffer the same fate, but check this out. Cisco's P/E ratio peaked at approximately 234, and its price-to-sales (P/S) ratio peaked at around 39. Palantir is even more expensive today than Cisco at its peak. CSCO data by YCharts At the very least, it's hard to imagine much more rational upside in Palantir from these levels. Even worse, any market downturn or misfire in Palantir's business could pop that valuation bubble. Investors should tread very carefully around Palantir stock these days. Amazon's stock history holds a valuable lesson for those worried about Palantir's lofty valuation Jake Lerch: Here's a sentiment that I often hear: "I love the stock, but it's too late to buy it now." And while there's nothing wrong with this viewpoint in theory, I've seen it disproven too many times in practice to grant it much weight. Take Amazon, for example. For years, countless analysts pointed out -- for good reason -- that Amazon's valuation was sky-high. From 1997 through 2000, Amazon's average P/S ratio was around 16. Moreover, the company had no profits -- and therefore no P/E ratio -- until 2003. Once it was making money, Amazon's average P/E ratio over its first five years of profitability was an eye-popping 88. Yet, investors who bought Amazon -- and held until today -- would be very happy with the results. In fact, $10,000 invested in the stock in 2008 would be worth about $800,000 today. This is all to point out that valuation isn't everything. Yes, Palantir is an expensive stock by just about any measure. Its current P/S and P/E ratios are significantly higher than the historical averages I cited for Amazon. However, that's because Palantir is poised to deliver enormous growth over the next decade or more. The company offers a unique value proposition that appeals to almost every organization. It can deliver efficiency gains for government agencies;it can cut costs for commercial clients. It can even help military and intelligence agencies win wars and prevent terrorist attacks. Simply put, there's very little this company can't do. Lastly, the nature of AI and data analysis means that Palantir is positioned to benefit from significant network effects and economies of scale as its AI systems improve and the company's overall client list grows. On top of that, its revenue is already growing at a year-over-year rate of 39%, andprofits are increasing, as is free cash flow. That's what gives me confidence to believe it's not too late to buy Palantir stock. Palantir is a winner for customers, but not investors Will Healy: When it comes to AI living up to its potential, perhaps no stock outshines Palantir. The company began in 2003 and utilizes AI and machine learning as a national security-focused tool. However, it was only when Palantir began to benefit from AIP's massive productivity gains that its popularity took off. Anduril Industries had a 200-fold efficiency gain in its ability to respond to supply shortages. A global insurer reduced an underwriting workflow from two weeks to three hours. With results like that, it is little wonder its commercial customer count is up fivefold over the past three years. Such gains undoubtedly played a role in the aforementioned stock price growth, but regrettably for Palantir bulls, the increases likely do not justify the software-as-a-service (SaaS) stock 's valuation, and here's why. In Q1, revenue of $884 million rose 39% compared to year-ago levels. With that growth, its net income of $214 million surged 103% higher over the same period. Unfortunately, triple-digit growth is not sustainable for even the best of companies, and the current valuation likely prices it for perfection. That "perfection" is likely not in the cards for Palantir. Analysts forecast revenue growth will slow to 36% for 2025 before falling to 29% in 2026. That is likely to do little to make the 96 P/S ratio more attractive, particularly when the larger and faster-growing Nvidia sells for 24 times sales. Indeed, Palantir is likely to play a key role in the AI field for years to come. Nonetheless, valuation matters at some point, and investors could find themselves stuck in a losing stock for years to come if the sentiment around the stock starts to turn negative. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Amazon and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
