Palantir joined the S&P 500 last month, and its stock ranks third by year-to-date performance among current members
Palantir CEO Alex Karp sees “an unprecedented opportunity ahead” for the software company.
Palantir Technologies Inc.’s explosive stock rally this year has it coursing toward a major milestone: a $100 billion market capitalization.
The company has become one of the largest software businesses in the world. By market cap, Palantir, which makes technology for governments and commercial enterprises, ranks eighth among U.S.-listed software companies in the GICS software industry, as well as 12th globally in FactSet’s packaged-software category, according to Dow Jones Market Data.
Palantir shares have surged 151.2% so far this year, and that’s helped the company reach the doorstep of a $100 billion valuation. With shares up more than 4% in Wednesday trading, the company finished with a market cap $96.59 billion. Palantir started off 2024 with a $37 billion valuation.
The stock performance of Palantir this year stands in contrast to less dramatic action in the broader software sector. The iShares Expanded-Tech Software ETF is up about 13% on the year, trailing the S&P 500’s 21.4% gain.
Palantir’s stock is a controversial play, with bears shaking their heads at a valuation they see as excessive. Of the 23 analysts tracked by FactSet who cover Palantir shares, six have buy-equivalent ratings, nine have hold-equivalent ratings and eight have sell-grade ratings. The average price target is $27.56, about 36% below current levels.
But Palantir’s stock has resonated on Wall Street this year as the company has shown traction with its Artificial Intelligence Platform, better known as AIP.
Chief Executive Alex Karp said in the company’s last shareholder letter that “the persistent and unbridled demand for our software, for an effective enterprise platform that makes artificial-intelligence capabilities useful to large institutions, shows no sign of relenting.”
Palantir grew revenue at a 27% clip last quarter, with Karp calling out a reacceleration of growth and “an unprecedented opportunity ahead to capture and build on that momentum.”
At the same time, Palantir has posted eight quarters in a row of GAAP profits, a factor critical to the company’s inclusion in the S&P 500. Palantir officially joined the index on Sept. 23 and its shares are up 42% just since early September, when the company was announced to be a forthcoming entrant.
While Palantir has only been in the S&P 500 for a short time, it ranks third in the index — behind only Vistra Corp. VST and Nvidia Corp. NVDA — in terms of year-to-date performance among the index’s constituents.