Palantir Technologies (NASDAQ:PLTR) has experienced a remarkable surge in its valuation this year, with the company’s stock price rocketing more than 330% year-to-date at the time of writing. This incredible upside has been driven by improving growth expectations for companies like Palantir focused on developing its artificial intelligence platform and expanding its customer base. To date, the company has done a great job of seeing meaningful growth tied to its AI advancements, with growth seen in both the company’s core government contracts business but also more notably among commercial clients.
Amid surging interest around AI beneficiaries and an inclusion to the S&P 500, investors are finding all sorts of reasons to load up on this top AI tech stock. Let’s dive into the bull case behind why analysts at Baird rated Palantir as neutral with a $70 target, and why this price target likely makes sense heading into what could be a volatile 2025. For reference, Palantir’s stock price currently trades at around $75 per share at the time of writing.
Key Points About This Article:
- Palantir has been among the most prominent high-growth stocks in this market, with a surging valuation tied to the company’s AI ambitions.
- While some analysts have pegged the stock at a higher valuation by year end 2025, I think a recent $70 price target placed on this stock is more likely right now.
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Market Outlook Influencing Predictions
Several factors are expected to influence Palantir’s performance in 2025. It’s worth noting that many of these factors could be construed as catalysts for the company, with U.S. government spending on military and big data initiatives likely to continue, despite calls for more efficiency across various sectors of the government. The Trump administration is likely to remain favorable to defense-focused initiatives, with Palantir’s technology key to a number of ongoing initiatives at the department of defense.
Additionally, while the government sector may see growth, most investors are more keenly focused on Palantir’s AI platform aimed at driving insights and analysis for large private enterprises. If the company’s AI platform continues to gain steam, Palantir is a stock that could certainly continue to see momentum in 2025.
That said, at this valuation, some analysts such as those at Baird are suggesting that the growth companies like Palantir have seen from their AI product rollouts could have gotten overextended, with the market pricing in a great deal of future growth. I certainly think that’s a fair assessment, given that Palantir currently trades at around 160-times forward earnings and more than 67-times sales. That’s steep.
We’ll have to see if the company’s upcoming earnings reports highlight accelerating growth. But even with a steep growth acceleration, I do think that the consensus price target for Palantir stock being around $40 does imply that those using a financial model to try to price this stock believe it’s heading lower next year.
2025 Price Prediction
I’m not a Wall Street analyst, but I do think most investors would do well to take a look at how Wall Street analysts view this particular growth stock. Yes, Palantir is a tech company that’s seen incredible recent growth, and does appear to have momentum that can be sustained next year. But at some point fundamentals matter, so in this case, one’s view on Palatir heading higher has to be based on some sort of incredible growth surge coming in the year to come.
I think having a price target of around $70 per share on Palantir is actually quite bullish – such a target would put me near the top of the analyst range on this stock right now. I do think the company is doing great things and have a positive outlook for Palantir over the next few years, but I also think fundamentals matter.
Sentiment remains very bullish around Palantir and its solid revenue growth potential as well as its strategic positioning within the AI space. Maybe I’ll be wrong and this stock will break to new highs next year – most bulls are certainly hopeful of such a move. But for now, I think investors may be best served by taking a more cautious tone on Palantir and consider trimming around current levels.
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