Palantir Stock vs. Oracle Stock: Wall Street Says Only 1 Will Head Higher in 2025

Core Insights - The article discusses the strong performance of Palantir and Oracle driven by AI spending, but suggests that Palantir's stock may be overvalued [1][10]. Palantir - Palantir's shares have surged 369% in 2023, but analysts project a median price target of $45, indicating a potential downside of 44% from current levels [2][3]. - The company reported a 30% revenue growth last quarter, with commercial customers increasing by 51% year-over-year, particularly strong in the U.S. where customer count grew by 77% and U.S. commercial revenue by 54% [4][12]. - Palantir's core products, Gotham and Foundry, have benefited from the launch of its AI platform, AIP, which has accelerated customer adoption [5]. - The adjusted operating margin improved to 38% from 29% year-over-year, and the company became GAAP profitable, earning a spot in the S&P 500 [13]. - Despite strong business fundamentals, Palantir's stock trades at an enterprise value-to-revenue multiple of 62 and over 150 times forward earnings estimates, raising concerns about valuation [14]. Oracle - Oracle's shares have increased by 61% in 2024, with a median price target of $197, suggesting a potential upside of 16% [2][3]. - The company expects its total cloud services revenue to exceed $25 billion for fiscal 2025, up from $19.8 billion in 2024 [7]. - Oracle's cloud computing segment, particularly Oracle Cloud Infrastructure (OCI), is experiencing rapid growth, with OCI revenue increasing by 52% in the most recent quarter and a backlog of $97 billion, up 50% [15][16]. - AI spending is a significant driver of Oracle's cloud revenue, with GPU consumption rising by 336% in the quarter, and partnerships with AI companies like OpenAI and Meta Platforms are expected to further boost demand [18]. - Oracle's shares trade at about 27.5 times forward earnings, and if the stock reaches the median price target, it would trade for approximately 30 times analysts' current estimates for fiscal 2026, which is considered a fair valuation given the growth prospects [19].