Palantir Technologies (PLTR) Stock Soars 2700%, But Bubble Risks Intensify
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
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Source: Fool
- Strong Revenue Growth: Palantir reported Q3 revenues of $633 million from government and $548 million from commercial sectors, with government revenue growing at 55% and commercial revenue at 73%, indicating the software's widespread popularity and rapid adoption.
- Stock-Performance Discrepancy: Despite a staggering 2700% increase in stock price since 2023, Palantir's trailing 12-month revenue has only grown by 104%, suggesting that the stock may be in a bubble and could face a significant pullback.
- Valuation Pressure: With a price-to-sales ratio of 117 and a forward P/E of 177, Palantir's valuations are significantly above industry norms, and analysts project only a 42% revenue growth rate by 2026, making it difficult to sustain current valuations.
- Margin Optimization: Palantir achieved a 40% profit margin in Q3, which is impressive, but the limited room for further margin expansion means the company must rely on revenue growth to justify its high valuation.
Analyst Views on PLTR
Wall Street analysts forecast PLTR stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for PLTR is 187.87 USD with a low forecast of 50.00 USD and a high forecast of 255.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
16 Analyst Rating
3 Buy
11 Hold
2 Sell
Hold
Current: 178.400
Low
50.00
Averages
187.87
High
255.00
Current: 178.400
Low
50.00
Averages
187.87
High
255.00
About PLTR
Palantir Technologies Inc. is engaged in building software to assist in counterterrorism investigations and operations. The Company has built four principal software platforms, including Palantir Gotham (Gotham), Palantir Foundry (Foundry), Palantir Apollo (Apollo), and Palantir Artificial Intelligence Platform (AIP). Apollo is a cloud-agnostic, single control layer that coordinates ongoing delivery of new features, security updates, and platform configurations, helping to ensure the continuous operation of critical systems. Gotham enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants. Foundry transforms the ways organizations operate by creating a central operating system for their data. AIP enables responsible artificial intelligence (AI)-advantage across the enterprise by using primary, core components built to effectively activate large language models and other AI within any organization.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
