Palantir (NYSE:PLTR) is emerging as a leader in the integration of AI into corporate operations. While its AI software has been in use for years, the launch of its Artificial Intelligence Platform (AIP) has proven especially impactful. AIP integrates advanced AI tools within Foundry and Gotham, enabling secure LLM deployment on private networks, enhancing security, and reducing data costs.
AIP has been a significant driver of success, particularly impacting its U.S. commercial business, as reflected in the company’s latest quarterly report. U.S. commercial revenue soared 55% year-over-year and total revenue reached $678.13 million – an impressive 27.2% increase, beating estimates by $25.71 million. Adjusted EPS also exceeded expectations, coming in at $0.09, a cent above analysts’ predictions.
Moreover, Palantir’s AI Bootcamp strategy is yielding impressive results, as evidenced by its rapidly growing customer base. The company now boasts 593 total clients, reflecting a 172% growth year-over-year.
In addition, its powerful partnership with Microsoft sets the table for increased integration into the Federal government’s secure data cloud, opening up additional opportunities with government agencies.
Reflecting this positive momentum, PLTR shares have soared nearly 90% year-to-date.
However, one investor, known by the pseudonym Juxtaposed Ideas, cautions that these successes may have driven share prices to potentially inflated levels.
“With these developments triggering PLTR’s lofty valuations compared to its peers, we believe that there is a minimal margin of safety at current levels,” writes the investor.
Juxtaposed Ideas highlights PLTR’s exceptionally high forward price-to-earnings ratio of 90.29x, noting that this not only surpasses Palantir’s own one-year average of 66.9x but also dwarfs other AI SaaS companies like Google (21.63x), Adobe (30.47x), Microsoft (31.75x), and even the white-hot Nvidia (45.70x).
As a further indication that now could be the time for profit-taking, the investor notes that insiders have been selling their ownership stakes. The $240 million that was offloaded by insiders in Q2 was up 788% year-over-year, which seems to hint that those closest to the action believe it might be time to cash in.
To this end, Juxtaposed Ideas suggests that, “based on PLTR’s historical trading pattern, the stock is likely to pull back to its uptrend support levels of $24s in the near-term.” As a result, he urges investors to “consider waiting for the pullback before adding for an improved dollar cost average.”
Therefore, the investor downgrades Palantir shares from a Buy to a Hold. (To watch the Juxtaposed Ideas track record, click here)
Meanwhile, Wall Street analysts are taking a range of views on PLTR stock, as shown by the 14 recent reviews – which include 3 Buys, 5 Holds, and 6 Sells. Added up, it comes out to a Hold (i.e. neutral) consensus rating. The average price target, at $22.42, implies a ~30% downside from the current trading price of $32.15. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
