Palantir Stock Went 4.5x This Year: Time To Rethink?

Core Insights - Palantir Technologies stock has increased nearly 11% in the last five trading days and has risen over 4.5 times since the beginning of the year, currently trading at approximately $82 per share [1] - The recent gains are attributed to discussions between Palantir and Anduril, along with other tech companies, to form a consortium for U.S. government defense contracts, potentially shifting focus from traditional contractors to more advanced AI and autonomous weapons [1] - The stock has also benefited from the market enthusiasm surrounding artificial intelligence stocks and stronger-than-expected quarterly earnings, with a notable surge post-U.S. elections [2] Company Performance - Palantir's stock has shown significant volatility over the past three years, with annual returns of -23% in 2021, -65% in 2022, and 167% in 2023, contrasting with the more stable performance of the Trefis High Quality Portfolio [3] - The stock's current valuation is high, trading at over 50 times consensus FY'25 revenue and more than 170 times consensus FY'25 earnings, while growth rates are estimated at around 25% for 2024 and 2025 [3] Market Dynamics - The potential for increased federal spending on national security and immigration under a Republican administration is driving investor optimism for Palantir's software tools [2] - Palantir's recent inclusion in the Nasdaq-100 index has likely increased demand for its stock from exchange-traded funds [2]