Investing

Palantir Stock May Still Be Undervalued According To This Wall Street Pro

Joey Frenette

Published: December 10, 2024 8:33 am

Last Updated: December 10, 2024 8:38 am

Despite plunging 5% on Monday, Palantir (NASDAQ:PLTR) stock remains the S&P 500’s best year-to-date performer, still up 337% for 2024. Despite the explosive rally and lofty valuation, there are still some pretty big names on Wall Street who are staying in the bull camp. Undoubtedly, when it comes to such high-flying growth sensations, especially those that have more than quadrupled in under a year, it becomes harder to please the crowd as more than just quarterly beats are expected.

With artificial intelligence (AI) enthusiasm working its way into the broader basket of software names, many of which went into hibernation when the semiconductor stocks melted up a year ago, questions linger as to whether such recently-heated names have further to go in the new year now that Wall Street has handsomely raised the bar.

Undoubtedly, Palantir stock has almost become a meme stock of sorts, with the name discussed frequently in corners of the internet, such as r/WallStreetBets, where many brave posters seek to make big, bold bets. Thus far, the meme traders have earned their bragging rights. And while shares of PLTR have yet to reach Gamestop (NYSE:GME) levels of momentum, there are some pretty high hopes for those hanging onto the stock going into the new year.

Palantir’s latest surge is bound to remind some of Nvidia (NASDAQ:NVDA) and its rise to becoming a multi-trillion-dollar household name. Even if it’s hard to justify Palantir stock’s lofty multiples with the current growth narrative (its sales growth isn’t in Nvidia’s league, at least not yet), there’s certainly a pathway for growth acceleration as the firm positions its Palantir AI Platform (AIP) as one of the most disruptive software products in the enterprise.

Key Points About This Article

• Nvidia stock’s a top performer this year, but its run may not yet be over.
• Upbeat analyst Dan Ives sees more AI tailwinds in 2025 that could jolt PLTR stock further.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Growth in the enterprise may justify the hefty price tag.

The government contractor stands to gain a lot as it unleashes its powerful AI product to the commercial world. It’s not hard to imagine many public firms across various industries don’t yet understand what they stand to gain from leveraging a product like AIP.

As more firms look to leverage the power of AI to get (or stay) ahead, perhaps the floodgates will open for the top AI software companies in a similar way they did for the semis more than a year ago. Unlike the chipmakers, however, AI software firms don’t have to worry about running into component bottlenecks. Though, ensuring proper capacity at the back end is a must.

As it stands, Palantir is a $165.1 billion company — a heck of a lot higher than it was when it went live on the public market back in late 2020. Still, it’s much smaller than other major players in the AI scene, most notably the AI innovators within the Magnificent Seven.

If Palantir can hit the spot with the enterprise as it did with government (that’s a big if), there’s a pathway for the stock to move higher. Of course, there are no guarantees that AI will do for Palantir what it did for Nvidia. With such a premium (over 360 times price-to-earnings) attached to the stock, coming up short in a coming quarter could prove devastating. Perhaps there was a reason CEO Alex Karp recently sold nearly 40 million worth of shares.

Dan Ives still views Palantir stock as cheap.

Despite the glorious run, Wedbush Securities Dan Ives sounds as bullish as ever, recently hiking his price target on the name to a Wall Street high of $75.00 per share — one of few targets that still entails positive upside for the overheated AI software titan.

Ives views 2025 as a pivotal year for AI and one that could see Palantir winning more contracts and expanding upon existing partnerships. Indeed, the pace of big deals hasn’t slowed for the firm, with Palantir recently expanding its deal with Shield AI for work on uncrewed systems.

Further, 2025 may be the year AI becomes fine-tuned to serve specific industries. Arguably, Palantir has already positioned itself to become a leader in government and defense. If its platform can create similar value for clients within other sectors (think healthcare) that are in need of greater efficiencies, perhaps Palantir stock may still be undervalued relative to its longer-term growth.