Palantir Stock: Bull vs. Bear

No wonder that Palantir is the darling of the growth investors!

It is easy to recognize that Palantir is strategically positioned to take advantage of the KI growth. In fact, the technology company achieved solid sales growth of 29% in 2024, which was heated by strong performance in its state and commercial segments. Of course, investors are optimistic about the shares.

And here is the greatest concern of the bears: his stretched evaluation. In a year in which sales rose by 29%, the share price rose by 420%and sent Palantir’s stock assessment into the stratosphere. The share has a price-to-sale ratio of 99 times for writing. In comparison, like a blue chip tech company alphabet‘S has a P/S ratio of only 5.6 times.

With such a high rating, Palantir must do perfectly in order to keep up with the expectations of investors or to face the risk of a downward assessment of the share price. Even then, there is no guarantee that investors will remain equally optimistic about the AI ​​industry in the future. If the AI ​​industry loses your appointment or find investors a new investment trend, you can change your capital from AI companies like Palantir. Even if Palantir is carried out without errors, there is no guarantee that it can maintain its high rating over time.

In addition, thanks to its enormous opportunity, the AI ​​industry will probably attract enormous capital and talent. The bears therefore have concerns whether Palantir can maintain their priority if the tech landscape develops, in particular due to the intensive competition through start-ups and tech giants alike.

It is unlikely that existing customers can change the providers without any problems due to the high switching costs, but potential customers are not always best for Palantir for their needs. For example, Palantir’s platforms are powerful, but highly complex and require a strong adaptation for every customer. This could restrict how easy it can scale to cover market demand compared to more “plug-and-play” software solutions.

Investors should not underestimate the potential risks of the possession of Palantir’s shares.

Palantir is a promising player in the growing room for AI and data analyzes with deep government bonds and growing commercial possibilities.

While the upward trend is real, the high evaluation and execution risks should lead to investors to step carefully. It could be a big winner in the AI ​​race, but his excessive stock price makes it extremely risky for conservative investors to invest in them.

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Suzanne Frey, manager at Alphabet, is a member of the Motley Fool Board of Directors. Lawrence NGA has no position in one of the shares mentioned. The Motley Fool has positions in and recommends Alphabet and Palantir technologies. The Motley Fool has a disclosure policy.

Palantir Stock: Bull vs. Bear was originally published by Motley Fool