This year, everyone was focused on one topic and one topic only: the role of the technology sector in the development and adaptation of artificial intelligence. While there have been clear winners in the semiconductor industry as major proponents of this new technology, others across various verticals have also earned market love through price action.
Palantir Technologies today
Palantir Technologies
(As of 12/27/2024 5:45 PM ET)
- 52 week range
- $15.66
▼
$84.80
- P/E ratio
- 395.42
- Target price
- $41.00
One of these verticals is the role of artificial intelligence in cybersecurity, which is a growing concern among many businesses and management teams as more and more information (and sensitive information at that) is uploaded and stored online. This topic likely won’t end anytime soon, especially as the global economy becomes more digitized every day. Given this, investors should not be surprised by the stock’s Palantir Technologies Inc. NASDAQ: PLTR dominate in 2024.
Some who follow the value investing Bible to the letter would say that Palantir stock’s current valuation multiples make it expensive. Others, more in tune with the short-term nature of the stock market, will say that the so-called “popularity contest” is won by Palantir and its value proposition to customers, and that this theme makes it expensive. The truth is that the stock will likely continue to rise now that it has been added to the Nasdaq-100 index.
What does a Nasdaq-100 addition mean for Palantir stock?
The short answer is additional bullish price action, and the long answer is an explanation of said price action. When a stock is added to an index such as the NASDAQ or the New York Stock Exchange (NYSE), various investment funds must allocate a certain percentage of their investment assets to that stock.
That’s why some expect Palantir stock to continue hitting new highs. In effect, the Nasdaq-100’s gains will become a virtuous cycle that feeds on itself. How so? Once certain investment funds are forced to add millions, if not billions, worth of Palantir shares, other investors will see an influx of institutional capital.
As rumors and sentiment spread, financial news outlets will take the message to Main Street, where social media will do what it does best, which is spread hot, juicy information. Because of this positive effect, Palantir’s stock price-to-book (P/B) valuation of 50.9x may appear cheap today compared to the next 12 months.
Palantir Technologies Inc. price chart (PLTR) on Monday, December 30, 2024
Some called the shares NVIDIA Company NASDAQ: NVDA expensive in 2023 when the stock was trading at a P/B of approximately 40.0x and decided to wait for a better price if the stock ever pulled back. Worse, some have even gone so far as to short-sell shares. Well, the result was not pleasant for either of these parties.
NVIDIA has raised its 2023 pricing sixfold and now trades at a P/B multiple of 52.0x, which appears to be a comfortable valuation for much of the market. The lesson here is that investors shouldn’t be afraid to pay a premium for companies that deliver and earn them.
What Wall Street Sees for Palantir Stock
Investors shouldn’t be afraid to see a consensus price target for Palantir stock of just $41 per share today, which would imply half the price the stock is currently trading at. Analysts should be very careful when rating and valuing companies because their reputations and careers are at stake.
However, sometimes some are willing to take risks in exchange for rewards for being right, such as the analysts at UBS Group. These analysts initiated coverage of Palantir shares as of December 2024 and decided to jump right in with a valuation for the company of $80 per share.
That target would mean today’s valuation is considered a fair price for Palantir stock, but here’s what could actually happen. As institutional capital flows into Palantir shares and Wall Street analysts pay attention to UBS Group’s move, growing analyst confidence could soon lead to upward revisions to price targets.
Moreover, as of November 2024, Palantir shares on State Street increased by 96.4%. company.
All of these factors make for a strong buy for most investors, as momentum, fundamentals, and sentiment position Palantir stock to dominate 2025 just as it did in 2024.
Before you consider Palantir Technologies, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Palantir Technologies wasn’t on the list.
While Palantir Technologies currently has an Analyst Rating of Underweight, the top-rated analysts think these five stocks are Outperform Buys.
View five stocks here
Click the link below and we’ll send you MarketBeat’s list of seven stocks and why their long-term prospects are very promising.
Get this free report