In the video clip below from a recent episode of The AI Investor Podcast from 24/7 Wall St., the team discusses Palantir Technologies (NYSE: PLTR), the enigmatic software company often shrouded in mystery, and its recent inclusion in the S&P 500 index—a significant milestone that requires a history of profitability and substantial market capitalization.

The stock reacted positively to the news, reflecting investor optimism about the company’s future prospects. Currently valued at approximately $78 billion and expected to generate less than $3 billion in sales this year, Palantir boasts a price-to-sales ratio comparable to NVIDIA‘s price-to-earnings ratio. Bank of America recently raised its price target for Palantir to $50, indicating a bullish outlook that some see as chasing the stock’s momentum.

Despite its premium valuation, Palantir is considered a high-risk, high-reward investment with significant potential in the artificial intelligence (AI) sector. The company has been positioning itself as a go-to platform for businesses looking to leverage AI capabilities. Notably, Palantir announced a major partnership with BP last week, signaling deeper industry integration.

While the stock is closely watched and expected to be part of our investment portfolio eventually, strategic timing is crucial due to its current valuation. The trend of companies being added to major indexes like the S&P 500 is becoming a significant catalyst for investments, as passive funds flow into these stocks. Other companies like Super Micro Computer saw similar stock surges upon inclusion, though some gains were later lost.

Looking ahead, Workday is another candidate that could potentially be added to the S&P 500, highlighting how index inclusion is influencing investment strategies in today’s market.

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Transcript

[00:00:00] David Hanson: Wanted to hit on one more a couple more news pieces. We saw the announcement that Palantir kind of the mysterious software company that everyone’s what exactly do they do? You’ve been on record saying this is an AI play for about a year now. I think you said, Hey, this could be the next NVIDIA type stock here.

[00:00:16] David Hanson: It was announced that it’s joining the S and P 500, which of course to be included in that you have to have. History of profitability. You have to be a certain size. So a pretty big moment for Palantir. And I think the stock was up some 15% on the inclusion news. So any thoughts on the Palantir news there?

[00:00:31] Eric Bleeker: Yeah. Palantir it’s definitely high risk, high reward. I’ve personally, I own the stock. I also own options on it. Cause I, I’ve thought that’s a better way to capture the upside and. Potential in this company. It’s now worth 78 billion. It’s going to do less than 3 billion sales this year. So for perspective it’s price to sales ratio is about the same as Nvidia’s P E ratio currently bank of America, they just raised the price target to 50.

[00:00:59] Eric Bleeker: I think that’s chasing the share price, but like you said, This is a stock that we’ve been covering for a long time. We actually predicted its inclusion into the S and P 500 back in, July, I think we wrote about if you Google discover the next NVIDIA, you can get our full 38 page AI report that we’ve issued on 24 seven wall street.

[00:01:19] Eric Bleeker: You can get the whole thesis there, but I really, I like this. Companies potential to really be the go to place that companies start with AI they had a major announcement this week with BP that they’re going to be a really tight partnership with that company. And, again, it’s just, I’m trying to think how much we would think about investing in Palantir in the portfolio.

[00:01:46] Eric Bleeker: And, we’re going to be strategic around pricing. It’s going to have to be in the portfolio eventually because the upsides there it is just right now it is also at a very premium multiple. So it’s a stock that I’m always watching. And, when we look at stocks, Going to be included in the S and P 500.

[00:02:04] Eric Bleeker: It’s worth mentioning that has become a major near term callous. I think super micro jumped 18 percent when it was included. It’s also lost all that. And then some at the current time, but if anyone out there is, looking at stocks that could be included and that as a potential catalyst, I think one stock that is at the top of the list to be an inclusion.

[00:02:24] Eric Bleeker: The next time they rebalance would be work day. I was surprised that they didn’t make in this round. So that is becoming a facet of today’s investing world, that there is so much passive money that when stocks get in these major indexes, it is becoming a catalyst for investments.

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