Image Source: Zacks Investment Research PLTR stock's consistent surge reflects optimism among investors eager to tap into the rapidly growing artificial intelligence (AI) market. The interest in AI stocks has been widespread, with significant gains seen across the sector. For instance, NVIDIA (NVDA) has gained 177%, International Business Machines (IBM) has climbed 43% and Oracle (ORCL) has gained 61% in the past year. Let's see if PLTR still offers a buying opportunity even after such a massive rally. PLTR ...

About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

But there's a catch. Palantir's software isn't cheap. If you annualize Q3's U.S. commercial revenue and then divide it by the customer count, you'll get an average spend per customer. That comes out to $2.23 million, which shows how expensive this software is. There isn't a large list of companies that can afford to spend that much on software, so Palantir's customer base is fairly limited. Furthermore, when you're within the range of companies that can afford that cost, there are also other options. Outsou ...

Palantir was the top-performing stock in the S&P 500 last year, but a smaller competitor is emerging on the scene.When it comes to artificial intelligence (AI), odds are you think about "Magnificent Seven" stocks such as Microsoft, Nvidia, or Tesla simply by default. But in 2024, one smaller player emerged from the deepest corners of the AI realm and propelled itself into the spotlight. Enterprise software darling Palantir Technologies had a year for the record books in 2024. The shares soared by about 350% ...

Palantir Technologies Performance - Palantir Technologies was the best-performing member of the S&P 500 in 2024, with its share price surging 340% last year due to growing demand for its artificial intelligence platform [1] - The company has grown into a $181.9 billion business [1] Arm Holdings Potential Growth - Arm Holdings is currently worth $148 billion, and its stock price would need to advance 23% to $174 per share for its market value to hit $182 billion [2] - Wall Street analysts have set target prices supporting this prediction, with Morgan Stanley at $175, Evercore at $176, Bank of America at $180, and Loop Capital at $180 per share [9] - If Arm's earnings grow 33% over the next four reports, its share price could increase 23% to $174, bringing its market value to $182 billion, surpassing Palantir's current market value [10] - In a bull-case scenario outlined by Morgan Stanley, Arm's stock could hit $300 per share before the end of 2025, implying 112% upside from its current share price of $141 [11] Arm's Business Model and Market Position - Arm designs central processing unit (CPU) architectures and licenses the intellectual property (IP) to customers, earning revenue through licensing and per-unit royalties [4] - The company also provides related technologies like systems IP and software development tools, simplifying application development on Arm-based chips across domains like AI, robotics, and scientific computing [5] - Arm chips are more power-efficient than competing processors built on the x86 architecture, with 99% market share in smartphones and a six percentage point increase in data center market share over the last two years [6] - The three largest public clouds (Amazon Web Services, Google Cloud, and Microsoft Azure) have designed Arm-based chips for their data centers, and ten of the world's largest hyperscalers are developing and deploying Arm-based chips [7] - The Nvidia Grace-Blackwell superchip, which pairs Nvidia GPUs with Arm CPUs, is expected to be highly successful, benefiting Arm through per-chip royalties [7] Arm's Growth Prospects and Valuation - Wall Street expects Arm's adjusted earnings to grow at 33% annually through fiscal 2027, making the current valuation of 104 times adjusted earnings look expensive [9] - Arm has consistently beaten consensus forecasts in recent quarters, suggesting Wall Street may be underestimating its growth trajectory [10] - The company's energy-efficient chips could be an attractive source of cost-savings for enterprises investing in AI systems, which require a tremendous amount of electricity [8]

Palantir Technologies - Palantir Technologies (PLTR) gained 340% in 2024, making it the best-performing stock in the S&P 500 despite joining the index in September 2024 [1] - The company's valuation is considered high, trading at 159 times forward earnings and 69 times sales, which may not justify its premium price [3] Alphabet - Alphabet (GOOG, GOOGL) delivered a 36% gain in 2024, significantly lower than Palantir's performance but is expected to outperform in 2025 [2] - Alphabet's forward earnings multiple of 21 is considered a bargain compared to Palantir's valuation [3] - Google Cloud is expected to benefit from AI-driven demand for cloud services, and AI agents could provide additional growth opportunities in 2025 [4] - Waymo, Alphabet's self-driving car unit, plans to expand into Atlanta and Austin in 2025, potentially becoming a major growth driver by the end of the decade [5] Nvidia - Nvidia (NVDA) ranked as the No 3 top stock in the S&P 500 in 2024, with shares soaring 171% [6] - The company's valuation is at 31 times forward earnings, which is reasonable given its robust growth potential [6] - The launch of Blackwell GPUs has seen "insane" demand, and Nvidia is on an annual cycle of new product rollouts, with the successor to Blackwell expected in late 2025 [7] Advanced Micro Devices - Advanced Micro Devices (AMD) underperformed in 2024, with shares declining 18%, but a rebound is anticipated [8] - AMD reported record revenue in Q3 2024 and expects another all-time high in Q4, driven by AI-fueled data center growth [8][9] - AMD's stock is considered undervalued with a PEG ratio of 0 31, making it one of the most attractively valued AI stocks based on its five-year growth potential [10]

Palantir's Performance and AI Stocks - Palantir Technologies was the top-performing AI stock in 2024, with its shares soaring by 350% during the year, making it the best-performing stock in the S&P 500 index [2] - While Palantir's gains could continue, investors are advised to consider other opportunities in the AI industry, such as the Invesco QQQ Trust, which provides exposure to leading AI stocks [3] Nasdaq and Tech Stocks Outlook - The Nasdaq has historically shown resilience, with only two instances of consecutive negative returns since its formation in 1971, the last being between 2000 and 2002 [4] - Following three consecutive years of declines, the Nasdaq posted gains for five years in a row starting in 2003, indicating a strong recovery trend [5] - Given the current bull market and historical trends, the Nasdaq is likely to extend its gains in 2025, making technology stocks a key focus for investors [6] Invesco QQQ Performance and Composition - Invesco QQQ experienced significant price fluctuations during the COVID-19 pandemic, with its lowest price at $169 during the early days of the pandemic [7] - Despite a 33% decline in the Nasdaq in 2022, Invesco QQQ traded at materially higher prices compared to pandemic lows, showcasing its resilience [8][9] - Invesco QQQ tracks the Nasdaq-100, providing exposure to influential AI stocks, including the "Magnificent Seven," as well as growth industries like cybersecurity and streaming [10][11] - The ETF also includes consumer discretionary stocks such as Airbnb, Costco, and PepsiCo, offering a diverse mix of growth opportunities across various sectors [12][13]

Stock Performance - Palantir stock gained 12 7% in December 2024, continuing its strong performance from earlier in the year [1] - The stock has climbed 3 5% early in 2025 trading, building on its 2024 momentum [5] Defense Industry Wins - Palantir partnered with Booz Allen Hamilton to accelerate US defense technology innovation [2] - The company secured a $36 8 million one-year contract expansion with US Special Operations Command [2] - Palantir won a $400 7 million four-year contract with the US Army, potentially reaching $618 9 million [3] - The company is reportedly forming a next-generation defense consortium with Anduril, another defense contractor [4] Financial Performance - Q3 2024 revenue increased 30% year-over-year to $726 million [5] - Net income more than doubled to $149 3 million in Q3 2024 [6] - Adjusted free cash flow more than tripled to $434 5 million in Q3 2024 [6] - The company achieved a 20% net income margin and 60% free-cash-flow margin in Q3 2024 [6] Valuation - Palantir is currently valued at 168 times this year's expected earnings [7] - The company trades at approximately 52 times expected sales [7]

Performance and Growth - Palantir's stock surged 340% in 2024, reaching a market cap of $167 billion [1] - The company achieved five consecutive quarters of accelerating revenue growth, driven by the popularity of its AI analytical tools [3] - US commercial revenue grew 54% YoY in Q3 2024, reaching a record $179 million [4] - US government revenue increased 40% YoY to $320 million in the same quarter, remaining the largest segment [5] - International government and commercial revenue grew 13% and 3% respectively, despite challenges in Europe and the Middle East [6] Financial Metrics and Valuation - Palantir generated over $2.5 billion in annual revenue with a GAAP net income margin of 20% and operating margin of 16% in the last quarter [7] - The company is projected to reach $10 billion in annual revenue by 2029 with a 30% net margin, potentially generating $3 billion in annual earnings [8] - The stock has a forward P/E ratio of over 60 based on potential $3 billion earnings, nearly triple the S&P 500's forward P/E of 22 [9] - Palantir's trailing P/S ratio of 68 is among the highest in history, reflecting extremely high market expectations [10] Future Outlook - Continued quarter-over-quarter revenue growth acceleration could lead to further stock gains in 2025 [11] - Long-term investors should consider the stock's price relative to future earnings and cash flow potential [12] - The current $167 billion market cap appears significantly overvalued compared to even the most optimistic future earnings projections [13]

Palantir Technologies - Palantir was the best-performing stock in the S&P 500 last year, driven by momentum in its AI platform and its focus on workflow and application layers of AI [1] - The company is transitioning customers from proof of concept to production, indicating a significant growth opportunity [1] - Palantir's stock is trading at a forward P/S ratio of 40x for fiscal 2025, more than double the peak SaaS multiples from a few years ago [2] - Executives, including the CEO and CTO, have been aggressively selling shares in recent months [2] Nvidia - Nvidia has been a major beneficiary of AI, with its GPUs becoming the backbone of AI infrastructure, leading to a 94% revenue growth last quarter [4] - The stock trades at a forward P/E ratio of under 31x and a PEG ratio of approximately 0.96, indicating an attractive valuation [5] - Nvidia is poised to benefit from the increasing demand for GPUs as AI models require exponentially more computing power [6] - Meta's Llama 4 model is being trained on 160,000 GPUs, and xAI's Grok 4 on 200,000 GPUs, with future models potentially requiring clusters of 1 million GPUs [7] - Nvidia's CUDA software platform and AI-specific microlibraries give it a competitive edge in the AI infrastructure space [8] Salesforce - Salesforce is trading at 7.7x next year's analyst estimates, making it an attractively priced alternative to Palantir [9] - The company is focusing on agentic AI with its Agentforce solution, which is considered the next step beyond generative AI [10] - Agentforce AI agents can perform complex tasks autonomously, with applications in retail and customer service [11] - The product costs $2 per conversation, and Salesforce has closed 200 deals since its October launch, with thousands more in the pipeline [12] - Salesforce forecasts deploying 1 billion Agentforce AI agents by the end of fiscal 2026 and has already released Agentforce 2.0 with new features [13] - Despite slower growth compared to Palantir, Salesforce is at the start of a significant AI opportunity [14]