Palantir Technologies: Rising Risks and Opportunities

Palantir Technologies Inc. (NASDAQ:PLTR) is among the most exciting stocks that every investor should pay attention to. Its significant success in recent years is supported by AI-focused presentations. The stock has gained 153% year-to-date and has reached more than three times its value in the past year.

However, this rise has also brought concerns about the balance between fundamental data and valuation. Palantir Technologies Inc. (NASDAQ:PLTR) stood out with strong results announced on November 3 and guidance exceeding expectations for Q4, supported by solid deal momentum. However, the next day, Raymond James maintained a cautious stance by not setting a price target along with its Stock Performance assessment. Analysts emphasized that a rich valuation based on an 85 price/sales ratio is the main reason for remaining on the sidelines.

A Bloomberg report dated November 3 indicated that the company's valuation based on price/sales ratio makes it the most expensive name in the S&P 500 Index. On a P/E basis, the company will rank as the fourth most expensive. Before the results, Morgan Stanley analyst Sanjit Singh stated, “Valuation is a big hurdle for us. This is the most expensive situation I have seen in my career.”

13F filings made by Scion Asset Management on November 4 revealed that the famous figure who predicted the 2007 U.S. mortgage crisis, Michael Burry, has taken a bearish position on Nvidia and Palantir through put options. Burry predicts an impending AI bubble and expects stocks to decline.

On the other hand, Palantir's CEO Alex Karp defended the company in an interview with CNBC, arguing that the fundamental data and growth are stronger than the claims from short sellers. He presented the successful results as evidence of the company's strength and predicted growth in the coming years, along with rising share prices.

However, the overall consensus currently appears cautious; only a quarter of the analysts covering the stock give it a Buy rating, and the 12-month median price target suggests only a limited potential increase.

Palantir Technologies Inc. (NASDAQ:PLTR) is a software company that develops data integration and analytics platforms for both government and commercial clients.

While being aware of PLTR's potential as an investment, we believe some AI stocks offer greater upside potential and carry less risk. If you are looking for a highly undervalued AI stock that could significantly benefit from tariffs implemented during the Trump administration, check out our free report on the best short-term AI stocks.