Palantir's Rally Is Replaying Cisco's Dot-Com Setup—And That Ended Brutally

Core Viewpoint - Palantir Technologies Inc has achieved a market capitalization of $396 billion with $3.3 billion in recurring revenue, showcasing a high 93x ARR multiple, which is significantly higher than peers like Salesforce and Adobe [1][4]. Group 1: Market Valuation and Comparisons - Palantir's market cap of $396 billion is juxtaposed with its $3.3 billion in recurring revenue, leading to a striking 93x ARR multiple [1]. - This valuation is compared to Cisco Systems during the dot-com boom, which had a valuation of $546 billion at a 131x forward earnings multiple, highlighting the potential for a similar fate [2][3]. - Palantir's multiples are significantly higher than those of Adobe (17.6x) and Salesforce (7.1x), positioning it as one of the most expensive stocks in the tech sector [4]. Group 2: Growth and Performance - Palantir has reported a year-over-year growth rate of 48%, bolstered by lucrative government contracts and the success of its AI platform, AIP [5]. - The current market enthusiasm for Palantir is contrasted with historical cautionary tales, suggesting that while the company may be positioned as a leader in AI software, any slowdown could lead to a significant selloff [5]. Group 3: Historical Context and Risks - The narrative surrounding Palantir echoes the past experiences of Cisco, which, despite surviving the dot-com crash, never fully regained its previous valuation [3][5]. - The article suggests that while Palantir may be at the forefront of software innovation, the historical patterns in market behavior indicate that such valuations can be precarious [6].