Palantir's stock is extremely expensive.Palantir (PLTR +4.14%) has been on a remarkable run since the artificial intelligence (AI) arms race began in 2023. Its stock is up over 2,700% since 2023, and has doubled in each year since then. However, there is a bit of a problem with Palantir's stock. It has become drastically overvalued, and I think it could be ripe for a pullback in 2026, opening the door to other companies to surge past it.Two AI companies that could be larger than Palantir by the end of 2026 ...

Core Insights - Salesforce, Inc. is a leading cloud computing company with a market cap of $215.9 billion, specializing in customer relationship management software and enterprise cloud solutions [1] - The company reported Q2 2026 adjusted EPS of $2.91 and revenues of $10.2 billion, surpassing expectations, but shares dropped 4.9% following a Q3 revenue forecast that fell short of analyst estimates [4] Company Performance - Salesforce shares have declined 36.6% from their 52-week high of $369, and have dipped 30% year-to-date, underperforming the Dow Jones Industrial Average's 10.7% gain [2][3] - The stock has been trading below its 50-day moving average since early March and recently slipped under its 200-day moving average, indicating a sustained bearish trend [3] Competitive Position - Salesforce has underperformed compared to its rival, Intuit Inc., which saw shares increase by 14.9% over the past 52 weeks [5] - Despite the underperformance, Salesforce stock has a consensus rating of "Moderate Buy" from 28 analysts, with a mean price target of $831.29, indicating potential for a 28.3% upswing from current market prices [5]

Core Viewpoint - Salesforce CEO Marc Benioff's comments about Palantir's high valuation and pricing may inadvertently validate the strength of Palantir's business model and pricing power [1][2][16] Group 1: Benioff's Remarks - Benioff highlighted Palantir's high revenue multiple and expensive software suite, suggesting a competitive edge rather than a critique [4][5] - His comments included a reference to a recent Army deal won by Salesforce, contrasting it with Palantir's own $10 billion deal with the U.S. Army over the next decade [6][7] Group 2: Palantir's Business Model - Palantir's model focuses on multi-year subscriptions with government and large enterprises, leading to significant revenue visibility and predictability [8][9] - The company benefits from high gross margin expansion over time due to low incremental costs after initial deployment [10] Group 3: Competitive Dynamics - Palantir's software is deeply integrated into customer operations, creating a strong stickiness factor that makes switching to competitors impractical [11] - The competitive landscape may drive both Palantir and Salesforce to enhance product development, fostering innovation that benefits customers and potentially increases valuations [14] Group 4: Implications for Investors - Benioff's remarks serve as an endorsement of Palantir's unique market position, reinforcing the narrative that its software is indispensable and worth the investment [15][16]

Core Insights - Zacks Premium provides tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1] Zacks Style Scores - Zacks Style Scores are indicators designed to help investors select stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum [2] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E, PEG, and Price/Sales [3] - The Growth Score evaluates stocks based on projected and historical earnings, sales, and cash flow to identify sustainable growth opportunities [4] - The Momentum Score identifies trends in stock prices and earnings outlooks, helping investors time their positions effectively [5] - The VGM Score combines the three Style Scores to highlight stocks with attractive value, strong growth forecasts, and promising momentum, serving as a useful indicator alongside the Zacks Rank [6] Zacks Rank and Style Scores Integration - The Zacks Rank utilizes earnings estimate revisions to assist investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 that also have Style Scores of A or B, while 3 (Hold) ranked stocks should also possess A or B Scores for optimal upside potential [9][10] Company Spotlight: Salesforce.com (CRM) - Salesforce.com is a leading provider of on-demand Customer Relationship Management (CRM) software, facilitating various organizational operations [11] - Currently rated 3 (Hold) on the Zacks Rank, Salesforce has a VGM Score of B and a Momentum Style Score of B, with shares increasing by 1.4% over the past four weeks [12] - Recent analyst activity shows 18 analysts have raised their earnings estimates for fiscal 2026, with the Zacks Consensus Estimate increasing by $0.18 to $11.30 per share, alongside an average earnings surprise of 4.2% [12]