The Nasdaq-100 recently welcomed Palantir Technologies, an artificial intelligence (AI) trailblazer, to its ranks. Palantir’s stock has skyrocketed 1,090% since early last year, and a Wall Street analyst believes it remains a buy as we approach 2025. Founded in the wake of 9/11, Palantir initially helped intelligence agencies connect disparate data to thwart terrorist attacks.
The company later expanded into the commercial sector, offering data mining, analytics, and AI solutions to various businesses. In the third quarter, Palantir reported revenue of $726 million, a 30% year-over-year increase, and a 7% sequential growth. Earnings per share hit $0.06, a 100% rise, marking the company’s eighth straight quarter of profitability.
Palantir’s U.S. commercial segment, which includes much of its AI Platform (AIP) revenue, grew 54% year-over-year. The company’s backlog rose 73%, and customer count increased by 77%.
Palantir’s remarkable Nasdaq-100 addition
Government contracts remain crucial for Palantir, with government revenue growing 40% year-over-year. As more enterprises adopt AI solutions, demand for Palantir is expected to surge. Analyst Dan Ives of Wedbush maintains an outperform rating on the stock with a $75 price target, citing unprecedented demand for the company’s AI applications.
Ives believes Palantir could become as significant as Oracle, suggesting a potential market cap of $494 billion. Some investors remain cautious due to Palantir’s high valuation, with the stock trading at 380 times earnings and 69 times sales. However, the company’s forward price-to-earnings ratio suggests it may be undervalued.
For those interested in Palantir but wary of its current valuation, strategies include initiating a small position and adding to it during price dips or using dollar-cost averaging to reduce the average purchase price. Palantir Technologies presents a compelling opportunity for investors willing to embrace some risk for potentially significant rewards. The company is well-positioned to benefit from the growing demand for AI solutions, making it a noteworthy addition to the Nasdaq-100.
