Palantir Stock at a Crossroads: Analyzing the Risks and Rewards for Investors

InvestorPlace04-23

Palantir (PLTR) continues to grow its sales and earnings.The valuation, however, remains stretched on AI hype.Shares will rise and fall on the hype trade.Source: Mamun sheikh K / Shutterstock.comI ...

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Calling it an AI stock doesn’t change that.Military contracting is a profitable but slow-growth business. Palantir brought almost 10% of last year’s $2.25 billion in revenue to the bottom line.The question is always whether it can do better, or grow faster, given the constraints of its business model. Like a political consulting firm, it can only play on one side of the street.The bull case for Palantir stock has always been built on its commercial contracts.But getting in late beats not getting in at all. Over the last 2 years Oracle stock is up 50% on the strength of its cloud. Its market cap is up to $315 billion. The deal also pu","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4532":"文艺复兴科技持仓","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","BK4553":"喜马拉雅资本持仓","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","PLTR":"Palantir Technologies Inc.","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","BK4534":"瑞士信贷持仓","BK4555":"新能源车","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","BK4533":"AQR资本管理(全球第二大对冲基金)","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","LU0661504455.SGD":"Blackrock Global Equity Income A5 SGD-H","BK4535":"淡马锡持仓","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","BK4538":"云计算","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0985489474.SGD":"First Eagle Amundi International AHS-C SGD-H","LU0878866978.SGD":"First Eagle Amundi International AHS-QD SGD-H","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","BK4512":"苹果概念","BK4549":"软银资本持仓","GB00B4QBRK32.GBP":"FUNDSMITH EQUITY \"R\" (GBP) INC","IE00BLSP4239.USD":"Legg Mason ClearBridge - Tactical Dividend Income A Mdis USD Plus","BK4511":"特斯拉概念","LU0433182093.SGD":"First Eagle Amundi International AS-C SGD","BK4548":"巴美列捷福持仓","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","LU0068578508.USD":"First Eagle Amundi International Cl AU-C USD","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","BK4554":"元宇宙及AR概念"},"translate_title":"处于十字路口的Palantir股票：投资者风险与回报分析","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PLTR":1.1},"content_text":"Palantir (PLTR) continues to grow its sales and earnings.The valuation, however, remains stretched on AI hype.Shares will rise and fall on the hype trade.Source: Mamun sheikh K / Shutterstock.comI have been down on Palantir stock (NASDAQ:PLTR) for some time.It is, at its heart, a government contractor. Calling it an AI stock doesn’t change that.Military contracting is a profitable but slow-growth business. Palantir brought almost 10% of last year’s $2.25 billion in revenue to the bottom line.The question is always whether it can do better, or grow faster, given the constraints of its business model. Like a political consulting firm, it can only play on one side of the street.I’m glad it’s our side.Palantir’s Commercial ArmThe bull case for Palantir stock has always been built on its commercial contracts.Palantir has been doing well in hospitals, planning and scheduling people and equipment.It makes sense. Hospitals need data security. Palantir’s software can anticipate demand and plan accordingly, faster than people can. It’s not just replacing whiteboards and spreadsheets. It is very much a Machine Internet application.Now Palantir is exploring a new niche, ad agencies. The idea is that it can use inventory and demand data to optimize ad campaigns, buying ads and adjusting prices to maximize clients’ return. It’s bringing tools first written for logistics into sales and marketing. It’s getting a hearing.This may be why the asset manager for Norway’s biggest bank recently cut his positions in Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) to buy more Palantir. Bruce Kamich of TheStreet recently hiked his price target to $48 per share. This helped the stock stay hot during the first quarter, rising by over one-third.But since April began, it’s down 19%.The Bear ClawAI is one of those Internet buzzwords that make you swoon.But isn’t Palantir getting a little ahead of itself, our Louis Navillier asks? Growth isn’t accelerating, nor is it expected to. It will certainly be profitable this year, and could be added to the S&P 500 at any time, forcing index funds to buy it.But even if Palantir hits its top earnings estimate of 41 cents per share, you’re paying 49 times that to own it. That’s based on April 19’s closing price of $20.31.The nosebleed valuation has some analysts downgrading the stock. Hype cycles, and AI is a hype cycle, are fragile things. Technologies always disappoint before they show their value.Palantir’s Key AllyWhile Palantir drew early interest by working with Cloud Czars like Microsoft, its alliance with Oracle (NASDAQ:ORCL) may be more important.The two companies are sympatico on a deep level. Oracle was late to the cloud because it remains highly proprietary. Palantir is also highly proprietary.But getting in late beats not getting in at all. Over the last 2 years Oracle stock is up 50% on the strength of its cloud. Its market cap is up to $315 billion. The deal also puts a floor under Palantir stock. If it falls, Oracle could buy it.The Bottom LineThe wars in Ukraine and Gaza are very, very good news for Palantir. So is the rise of China. It’s prepared to exploit that through former Congressman Mike Gallagher, one of its new hires.War is unhealthy for economies and other living things. It’s also very good for military contractors, especially those on the cutting edge like Palantir.But getting Palantir stock to $48/share, or even $30, depends a lot more on its commercial arm than its military wing.I wouldn’t rush to buy Palantir here. The recent wobble in AI semiconductor stocks like Nvidia (NASDAQ:NVDA) may spread. But keep it in mind the next time animal spirits are feeding your view of the market. The long-term view of the business is positive.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":12,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2429748160"}