Strong Rally at Palantir: Soaring High or Possible Crash Landing?

In a year that granted Palantir Technologies an impressive market value increase of around 60 billion dollars, analysts now see a clear need for adjustment at the data analysis company. Although its inclusion in the S&P 500 in September and success in the field of artificial intelligence have bolstered the stock, experts anticipate a future setback. The reason: With a valuation exceeding 100 times future earnings, Palantir appears significantly overvalued compared to other AI companies like Nvidia and Oracle. While Nvidia trades at about 37 times earnings and Oracle at 26 times, Palantir faces the challenge of justifying its valuation. The analyst firm Raymond James recently withdrew its buy recommendation in light of the high valuation, emphasizing that Palantir has no room for error in upcoming quarterly results. Despite these warnings, the stock climbed by up to 2.2 percent on Thursday. Among the S&P 500 front-runners, Palantir currently ranks behind Vistra and Nvidia. Analysts' assessments, however, are unusually critical: Of the 21 analysis firms monitored by Bloomberg, only four recommend buying, while ten advise holding and seven suggest selling. Palantir's CEO Alex Karp, who has a contentious relationship with Wall Street, claims analysts do not understand his company. Despite the skeptical ratings, Palantir has attracted new customers such as CBS Broadcasting, General Mills, and Aramark. Government contracts remain particularly lucrative, continuing to account for the majority of revenues. However, investors agree that the stock could still spark another price surge following its spectacular rise.