Palantir's stock (NASDAQ: PLTR) has been busy making new highs, with the latest mark of $180.58 also likely to give way this morning, with pre-market trading putting PLTR at $181.21, +0.93%.
A week of significant gains following earnings, has followed a strong year, and a breakneck ascent since the start of 2024 that has seen prices 10x.
Now, speculation is running wild about whether the coveted $200 mark will be next to fall for Palantir.
The speed of growth in the stock is primarily put down to demand for its AI-driven software across both commercial and government sectors which has translated to significant contract wins, including a $30 million deal with U.S. Immigration and Customs Enforcement, and potential U.S. Army contracts valued at up to $10 billion.
The company's Q2 earnings report further solidified investor confidence.
Palantir reported its first-ever quarterly revenue exceeding $1 billion, a 48% year-over-year increase. Profit jumped 33% to $327 million, driven by a 53% rise in government sales and an impressive 85% surge in U.S. commercial revenue. As a result, Palantir raised its full-year revenue forecast to between $4.14 billion and $4.15 billion, exceeding previous estimates.
Despite the optimistic outlook, some analysts are wary of Palantir's lofty valuation. The stock trades at forward earnings multiples that beggar belief, prompting debates about its sustainability, and yet the company continues to deliver, and the stock moves higher.
While the company's growth trajectory is undeniable, such high valuation metrics could pose risks for investors if growth slows or market sentiment shifts.
Bull Case:
- Strong growth in both government and commercial sectors, particularly in the U.S.
- Increasing demand for Palantir's AI-driven software and platforms.
- Record-breaking Q2 earnings and raised revenue forecast for 2025.
- Positive technical indicators, with the stock trading above key moving averages.
Bear Case:
- High valuation
- Potential for increased expenses due to seasonal hiring and talent competition.
- Risk of market volatility and shifts in investor sentiment.
- Dependence on continued strong growth to justify the current valuation.
Palantir is riding a wave of strong technical and fundamental momentum, making a run towards $200 plausible if growth continues and market sentiment remains positive. What happens from there? It doesn't feel like all that long ago (because it wasn't) that questions were asked about $100, and then $150.
When Palantir broke $100 back in February, it was followed by a push to $125, before the market pulled back. The rally off that April low now stands at more than 140%, for a $423billion market cap company that shows no signs of faltering operationally. This is a volatile play after such a rapid run, but it would take a brave person to bet against PLTR right now.
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