Analyst says Palantir stock ‘is a high-risk investment' with new price target

Core Viewpoint - Palantir is viewed as a transformative player in the AI sector, with Piper Sandler initiating coverage with an Overweight rating and a $170 price target, indicating a potential upside of approximately 10% from current levels [1] Company Potential - Palantir is recognized for its expanding role in facilitating AI adoption in both enterprise and government sectors, being described as a central force in the ongoing "AI revolution" [2] - The company is positioned to capture market share in two total addressable markets (TAMs) exceeding $1 trillion each [1] Historical Context - Piper Sandler has monitored Palantir for over five years, noting its evolution from a "coveted late-stage private" company to a direct listing in 2020 [2] - The stock experienced a significant decline to $6 in late 2022, referred to as the "trough of disillusionment," but has since rebounded, with Bracelin characterizing this recovery as a "rise of the phoenix" moment [2] Valuation and Investment Risks - Palantir's current valuation is highlighted as a concern, with a trailing P/E ratio of 336x, which is close to the average of the "Magnificent 7" at 342x [4] - The stock is described as a high-risk investment due to its rich valuation premium and historical volatility, including multiple drawdowns of 20-29% [3][5] Investment Strategy - Piper Sandler recommends a cautious approach, advising investors to adopt a "buy on a drawdown" strategy to build positions in Palantir [4][5]