Introduction
Palantir [PLTR] provides software and platforms for data analytics to both government and commercial bodies.
Headquartered in Denver, Colorado, the company’s product offering allows clients to efficiently process and analyze large amounts of data, identifying and finding solutions to complex issues, often with the help of artificial intelligence (AI).
PLTR’s share price went from strength to strength in 2024, with much of its recent growth starting in November.
The firm is set to announce Q4 earnings on February 3 after markets close. Will the results continue to bolster PLTR stock, or are there clouds ahead for the stock?
What’s New for PLTR?
Strong Q3 results sparked a run on PLTR stock back in November 2024, with global revenue growth of 30% and US revenue growth of 44% year-over-year igniting a fervor among investors.
“The world will be divided between AI haves and have-nots,” Co-Founder and CEO Alexander Karp said. “At Palantir, we plan to power the winners.” AI, therefore, continues to drive excitement and optimism.
Since November, two contracts totaling over $650m have been confirmed and expanded with US defense bodies, and the company has restated its focus on AI expansion through collaborations with Anduril and Pray.com.
How Has PLTR Stock Responded to this News?
PLTR jumped an impressive 34.10% in the two days following strong Q3 earnings on November 4, 2024.
Subsequent positive news and the wider optimism surrounding AI, buoyed by US President Donald Trump’s support of big tech, saw PLTR climb a huge 98.94% from November 4 to December 24’s close.
January 3 saw a wider pullback in the technology industry, with PLTR dipping 18.66% to January 13’s close. This has been written off by some analysts as a necessary correction as investors reap their rewards, and does not seem to have been sparked by any underlying fundamentals or issues with the company.
PLTR’s share price has since rallied 23.47% to January 28’s close. Investors may be wondering whether Q4 earnings could trigger a jump to match November’s market movements.
How is PLTR Measuring Up to the Competition?
In terms of close competitors, Snowflake’s [SNOW] core offering is the Data Cloud, a worldwide network allowing thousands of organizations to mobilize and utilize data.
Like Palantir, Snowflake has announced strategic collaborations and projects prioritizing AI in the future of data, but SNOW’s share price did not see the same meteoric rises throughout 2024. In fact, SNOW finished last year down 22.41%, despite a 32.71% single-day rally following Q3 results on November 20.
Salesforce [CRM] is the world’s top AI customer relationships management platform, with 150,000 companies using its end-to-end cloud-based software. Consistently iterating products to improve productivity and gaining new big-name customers, Salesforce had some highs and lows in 2024, ultimately gaining 27.76% for the year.
PLTR | SNOW | CRM | |
Market Cap | $182.77bn | $62.06bn | $344.47bn |
P/S Ratio | 72.93 | 18.32 | 9.45 |
Estimated Sales Growth (Current Fiscal Year) | 26.02% | 27.91% | 8.87% |
Estimated Sales Growth (Next Fiscal Year) | 24.89% | 23.34% | 9.07% |
Source: Yahoo Finance
Investors will likely be wary of Palantir’s exceedingly high P/S ratio of 72.93. A strong growth prediction of 26.02% might not be enough to offset the price-to-sales risk for many investors.
SNOW is clearly a smaller play, with its market cap being around a third of PLTR’s, but its growth prospects seem strong and it may appear a slightly more stable option, as could Salesforce’s modest but respectable 8.87% growth projection alongside a P/S ratio of 9.45.
PLTR Stock: The Investment Case
Analysts seem split on whether PLTR can make it as a growth stock, or whether it is time to sell up and cash in on the most recent run.
Of the 23 analysts tracking PLTR on Yahoo Finance as of January 28, 12 rate it a ‘hold’ and 6 an ‘underperform’.
Meanwhile, Ray Dalio increased his holdings in the firm by a notable 506.8% in Q3 2024, while Cathie Wood reduced her stake by 15.4% in the same period.
The Bull Case for PLTR
As the world settles into Trump’s second term as US president, there is conjecture that AI will play a bigger role in US security and defense — something that recent contracts announced by Palantir seem to confirm.
It is worth flagging that Palantir’s Co-Founder, Peter Thiel, and other executives have strong links to frontrunners in Trump’s administration, including Elon Musk.
This could bode well for continued growth and stability of business for Palantir over the next four years and beyond.
Even looking beyond prospective deals coming from Trump’s team, Palantir is entering 2025 with a strong pipeline of partnerships and products. In an ever-changing industry, a firm business base is crucial to stock price growth.
Palantir has cornered a large part of the US defense AI market, and it is now turning its focus to iterating and expanding its commercial offering.
A varied and industry-leading product book could support PLTR to reach new heights over the coming months.
The Bear Case for PLTR
That said, there are certainly considerations that might give investors reason to pause.
Palantir topped the S&P 500 in 2024, and its focus on AI may suggest it can sustain further growth through Q4 earnings and beyond. That said, PLTR’s recent runs have left its valuation sky-high, and a correction could well be on the horizon.
Some analysts are suggesting the stock is wildly overvalued, and that a dip will come before the stock’s fundamentals and strong pipeline can continue propelling it upwards.
Following the response to its Q3 earnings, there is understandable hype surrounding the firm’s upcoming Q4 results.
However, some investors might question whether there is any reasonable upside left for the stock, even if Q4 results match the highest expectations. The fact of the matter may be that — if Palantir delivers strong quarterly results but the stock does not rally — a cool-off is inevitable.
Conclusion
Palantir went from strength to strength in 2024, outperforming every other stock on the S&P 500. While its business case is solid and Q4 results are likely to be strong, it is possible that the stock rose too far, too fast last year, and a correction could well be on the horizon.
As AI data management continues to boom, PLTR will be a stock to watch in 2025.
Disclaimer Past performance is not a reliable indicator of future results.
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