Palantir (NASDAQ:PLTR) has been drawing plenty of investor attention lately, with its soaring share price propelling it into the ranks of the most valuable tech companies.
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That momentum is being fueled by strong fundamentals. In its last earnings report at the beginning of May, Palantir disclosed record-breaking revenues of $884 million (representing 39% year-over-year growth) along with a growing cadre of satisfied customers. The company shows no signs of slowing down, offering bullish guidance for both Q2 and FY 2025.
Still, with a sky-high P/E ratio north of 200, investors are starting to ask: is Palantir’s future really bright enough to justify that kind of premium?
Top investor James Foord believes the answer could be yes. While he doesn’t ignore the lofty valuation, he sees a compelling case for why PLTR could still be worth every penny.
“The bull thesis relies on Palantir maintaining a ‘monopoly-like’ dominance on AI in terms of enterprise software and even government contracts,” explains the 5-star investor, who is among the top 3% of TipRank’s stock pros.
Foord also highlights the bigger picture: U.S. defense spending is barreling toward the $1 trillion mark, and the enterprise software market could surpass $500 billion in the near future.
In other words, Foord believes Palantir may be setting the stage for its own “Nvidia moment” – especially with CEO Alex Karp confidently claiming that Palantir’s tools can make businesses up to 50x more productive.
“The compelling thing about Palantir is that it could be on the cusp of redefining business, while also benefiting from a secular growth in defense spending,” adds Foord.
Of course, Palantir will not be without rivals, who will also be aiming to make inroads in these growing markets. The real question, posits Foord, is how long the company’s market dominance will last.
The risk of slowing growth is therefore very real, but according to Foord, so is the potential reward.
“In my book, though, Palantir remains a buy since I assign a higher probability to a surprise outperformance than an underperformance,” concludes Foord, who rates the stock a Buy. (To watch Foord’s track record, click here)
Wall Street, on the other hand, can’t bring itself to get fully onboard. With 11 Hold ratings, 3 Buys, and 4 Sells, PLTR lands at a consensus Hold (i.e., Neutral). And the Street’s average 12-month price target of $100.13 implies a potential downside of ~21% from current levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.