Unless you’ve been living under a rock, you’ve likely noticed that AI has become quite the phenomenon lately. Some even believe it has the potential to be the most revolutionary technology in human history.
Given its potential, it’s no surprise that businesses want a piece of the action. Northland’s Michael Latimore, a 5-star analyst ranked among the top 3% of the Street’s stock pros, notes, “AI drives material efficiencies, new revenue sources, and security. The addressable markets are growing 30%+. Use cases expand over time within companies.”
Much like the evolution of the internet and PCs, the AI market is expected to gradually shift focus from hardware to software. One company poised to benefit from this transition is Palantir (NYSE:PLTR).
While the emergence of GenAI has driven companies to embrace AI, early efforts have often been “fragmented and experimental.” But Palantir’s AI operating system, built on their Ontology software, solves numerous obstacles to adoption, and is leading to widespread AI use amongst enterprises.
“Palantir doesn’t just automate insight creation, but also decisions,” the 5-star analyst goes on to say, adding that it is representative of the “next wave of AI.”
“Great AI comes from great data,” Latimore continues, pointing out that this is true for enterprises as well. However, many companies face issues with “siloed, disconnected data,” which hinders the scalability of enterprise AI as new demands arise. Palantir addresses this issue by simplifying data access and utilization without requiring expensive overhauls.
“Palantir makes every company’s data great,” Latimore adds, “and thus, fuels great enterprise AI.”
While this certainly sounds like a strong endorsement of the big data company – and in many ways, it is –investing involves considering multiple factors. One critical aspect often discussed when Palantir is mentioned is its valuation. Latimore acknowledges this, noting that while Palantir is “igniting the use of AI across the enterprise landscape,” its shares are currently trading at 22x FY25 revenue, placing it among “the top of all SaaS companies.”
As such, Latimore initiated coverage on PLTR with a Market Perform (i.e., Neutral) rating and $35 price target, suggesting shares will climb 8% higher from here. Nevertheless, the analyst mentions he would “look to buy this enterprise AI leader on dips.” (To watch Latimore’s track record, click here)
Turning now to the rest of the Street, where the analyst consensus has reached a similar conclusion, viewing PLTR stock as a Hold. However, the average price target tells a different story with most appearing to think the shares are overvalued; at $22.42, the figure suggests the stock will be changing hands for a ~30% discount a year from now. (See Palantir stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
