Palantir (PLTR) is among the favorite stocks for investors to trade right now, and there are good reasons for such a view. With volatility comes the opportunity for traders to make money, and the daily price swings in PLTR stock have certainly been notable of late.
Indeed, the company's price action in recent days has been significant, with all but two days sending shares of this leading AI and computing infrastructure stock more than 1% higher. That's some strong recent price momentum, and these recent moves signal a reversal of prior negative sentiment among AI-related names as it pertains to the spending and long-term growth outlook of this sector overall.
That said, let's dive into whether Palantir (which is still down more than 25% from its recent peak and 15% on a year-to-date basis) is worth buying and what fundamental driver could take this stock to fresh all-time highs this year.
Let's Dive Into the Fundamentals
Overall, the story with Palantir remains one that centers on growth expectations. I say that because, looking at the underlying fundamentals shown below, it's clear that there's plenty of future growth that's baked into the company's valuation.
The rule of thumb put forward by a number of iconic investors is that companies trading above a price-earnings-to-growth ratio of 1.0 are expensive. At a ratio of nearly 3 on this front, with a forward price-earnings ratio at 140 times, Palantir is undoubtedly one of the most expensive large-cap tech stocks in the market. Personally, I think looking at a company's PEG ratio is more viable for companies in such a camp, as it adjusts this multiple for a given company's growth rate, which is really what every investor should be doing.
Now, it could certainly be the case that continued strength in AI-adjacent stocks will drive higher-than-expected revenue and earnings growth down the road, in which case this is a stock that could look very cheap in a few years' time. I think the jury is still out on that front, with continued concerns around current spending levels on AI applications and adoption creating some pause in the market from investors.
That said, it's also true that any significant pullback in PLTR stock is one that seems to be met with significant buying pressure, at least in the recent past. And the aforementioned near-term price action we've seen in this stock over the past week could be indicative of another risk-on rally taking hold. With sentiment improving in the market broadly following a number of significant geopolitical moves from the Trump administration, really anything is possible right now.
With that in mind, let's defer to what the experts think of Palantir right now.
What Do Wall Street Analysts Think of PLTR?
The current consensus price target on PLTR stock, at least according to experts on Wall Street, is just slightly above $200 per share. Thus, those who follow this company the closest are pricing in around 33% upside from current levels, with a high price target of $260 per share indicating this stock could have near-double-up potential from here.
Now, such a move would not necessarily be out of the ordinary for this stock, which has seen absolutely incredible momentum on the way up for most AI-related stocks. That said, I do think the ride from here will be a bit bumpier than it was in 2023-2024, when Palantir really became one of the favorite “meme stocks” of sorts, at least for traders looking to capture upside from near-term bullish price momentum.
PLTR will continue to be a stock I follow closely, and I will update investors accordingly with any major news ahead.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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