Over the past two months, Palantir Technologies (NYSE:PLTR) stock came back to earth, losing 23.2%. It now trades in the $16.50 range. Bulls wonder if their PLTR stock analysis has sprung a leak.
I don’t know many other tech stocks that have fundamentally pulled up their socks over the past 24 months like Palantir has, only to be ostracized entirely by analysts. If you hang your hat on the consensus, you might not want to own Palantir long-term.
However, if you’re an independent thinker, CEO Alex Karp might be just your cup of tea. With AI bound to be the topic most on the minds of investors in 2024, Palantir is likely to be front and center in the discussions surrounding the once-in-a-generation technology.
Is it a buy, or is PLTR stock a sell? I think it’s the former, especially given its retreat over the past two months. However, covering both sides of the argument in my Palantir stock analysis makes sense.
Here goes.
Why Do Analysts Hate PLTR Stock?
Hate is probably way too strong a word here.
However, with only 26% of the 19 analysts covering its stock rating it as a Buy, it’s hard not to notice the lack of love from Wall Street. And, if that’s not enough, the analysts’ target price over the next 12 months is $14.50, 12% below where it’s currently trading.
Since the beginning of the year, at least three analysts have said negative things about Palantir.
Brent Thill from Jefferies downgraded the stock to Underperform from Hold on Jan. 5. The analyst believes the AI hype surrounding the company’s stock is overblown. However, until the valuation becomes more reasonable, Thill sees better opportunities with Monday.com (NASDAQ:MNDY) and Microsoft (NASDAQ:MSFT).
TipRanks reported on Jan. 31 that RBC Capital analyst Rishi Jaluria maintained his Sell rating on Palantir stock with an obscenely low target price of $5. Now that’s someone who doesn’t buy what Alex Katz’s selling.
In August, Jaluria appeared on CNBC to give Palantir a beatdown.
“This is not truly a generative AI company. When we look at Palantir and based on our conversations with [industry observers and Palantir’s employees], this does not appear to be anything truly differentiated when it comes to generative AI,” Jaluria said on CNBC’s Asia programming.
Monness analyst Brian White doesn’t believe Palantir will be able to repeat its AI success in 2024, which was precipitated by the launch of AIP, its artificial intelligence platform. He appears to be in the valuation-concerns camp. Up nearly 100% over the past year, it’s understandable.
It Continues to Defy the Odds and Profitably Grow
When I last wrote about Palantir in early January, I suggested that it was poised to double in 2024 because it was making money. With four quarters of GAAP profits in the books, it can be added to the S&P 500. That alone should help boost its share price. There is, however, more to like about Palantir than just a possible index inclusion.
Wedbush analyst Dan Ives, best known as an Apple (NASDAQ:AAPL) supporter, is also on the Palantir bandwagon. He believes that it will continue to grow its commercial business in 2024, with a big assist from its AIP platform.
Ives considers Palantir the best “pure play” AI name out there.
“It’s probably the best pure-play AI name in terms of them monetizing, not just on the government side but on the enterprise side… this is an inflection point quarter and this remains, in our opinion, one of the core AI names over the coming years,” Ives told CNBC in August.
AI will continue to help both its government and commercial revenue. However, I would not be surprised if it helped its commercial business more so in 2024, pushing the segment’s revenue past its government revenue by the fourth quarter.
For whatever reason, analysts have been doubting Thomases since the day Palantir went public in 2020. Like Ives, I believe Alex Karp and Palantir will prove them wrong.
This Palantir stock analysis suggests its a buy.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
