Shares of Palantir (NASDAQ:PLTR) stock, the database software company that has become an artificial intelligence (AI) darling, continue to rush ahead of the most bullish analysts.
Mizuho, for instance, just raised its price target on the stock from $18 to $21 per share. This sounds great, but PLTR stock opened for trade this morning at $26.81 per share. That’s a market capitalization of $59 billion for a company with 2023 revenues of $2.25 billion.
Pros vs. Amateurs
It’s small investors who are powering Palantir higher, not the stock-picking pros.
Almost one-third of the analysts surveyed at Tipranks are telling investors to sell based on its valuation. But the small investors at Stocktwits have fallen in love with the stock.
The danger is that Palantir is becoming a meme, like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) did a few years ago. The difference is that there’s a reason for optimism. The TITAN contract that set investors off yesterday could be the first of many.
There’s also little fear of Palantir’s price-to-sales ratio of 26 when Nvidia (NASDAQ:NVDA) sells at a similar ratio and continues to power higher. The difference is growth. Palantir’s growth in 2023 came in at 18%. Bulls will note it’s 35% for commercial contracts. But it’s nothing like the 230% growth at Nvidia.
The unspoken reason for Palantir’s sudden rise is war. Russia-Ukraine, Israel-Gaza, and threats from Iran and China all call for a strong response. Palantir’s AI technology is seen as a vital counter. Palantir CEO Alex Karp has done nothing to discourage the war talk.
PLTR Stock: What Happens Next?
The biggest risk to Palantir stock right now is an end to war, but that looks unlikely to the bulls. The automation of war looks set to make investors some money.
As of this writing, Dana Blankenhorn had a LONG position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
